^ IMPLEMENTATION OF INDIAN
^^ GAMING REGULATORY ACT
/ 4,R 31/3:103-17/PT.5
Inplenentation of Indijn Siniiig Reg.- HEAKIJNG-
BEFORE THE
SUBCOMMITTEE ON
NATIVE AMERICAN AFFAIRS
OF THE
COMMITTEE ON
NATURAL RESOURCES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
IMPLEMENTATION OF PUBLIC LAW 100-497, THE INDIAN GAMING
REGULATORY ACT OF 1988, AND RELATED LAW ENFORCEMENT ISSUES
HEARING HELD IN WASHINGTON, DC
OCTOBER 5, 1993
Serial No. 103-17, Part V
Printed for the use of the Committee on Natural Resources
IMPLEMENTATION OF INDIAN
GAMING REGULATORY ACT
OVERSIGHT HEARING
BEFORE THE
SUBCOMMITTEE ON
NATIVE AMERICAN AFFAIRS
OF THE
COMMITTEE ON
NATURAL RESOURCES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
IMPLEMENTATION OF PUBLIC LAW 100-497, THE INDIAN GAMING
REGULATORY ACT OF 1988, AND RELATED LAW ENFORCEMENT ISSUES
HEARING HELD IN WASHINGTON, DC
OCTOBER 5, 1993
Serial No. 103-17, Part V
Printed for the use of the Committee on Natural Resources
U.S. GOVERNMENT PRINTING OFFICE
84-760 WASHINGTON : 1994
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-046382-3
COMMITTEE ON NATTJRAL RESOURCES
GEORGE MILLER, California, Chairman
PHILIP R. SHARP, Indiana
EDWARD J. MARKEY, Massachusetts
AUSTIN J. MURPHY, Pennsylvania
NICK JOE RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
PAT WILLIAMS, Montana
RON DE LUGO, Virgin Islands
SAM GEJDENSON, Connecticut
RICHARD H. LEHMAN, California
BILL RICHARDSON, New Mexico
PETER A. DeFAZIO, Oregon
ENI F.H. FALEOMAVAEGA, American
Samoa
TIM JOHNSON, South Dakota
LARRY 1,aR0CC0, Idaho
NEIL ABERCROMBIE, Hawaii
CALVIN M. DOOLEY, CaUfornia
CARLOS ROMERO-BARCELO, Puerto Rico
KARAN ENGLISH, Arizona
KAREN SHEPHERD, Utah
NATHAN DEAL, Georgia
MAURICE D. HINCHEY, New York
ROBERT A. UNDERWOOD, Guam
HOWARD L. BERMAN, California
LANE EVANS, lUinois
PATSY T. MINK, Hawaii
THOMAS J. BARLOW III, Kentucky
THOMAS M. BARRETT, Wisconsin
DON YOUNG, Alaska, Ranking Republican
Member
JAMES V. HANSEN, Utah
BARBARA F. VUCANOVICH, Nevada
ELTON GALLEGLY, CaUfornia
ROBERT F. SMITH, Oregon
CRAIG THOMAS, Wyoming
JOHN J. DUNCAN, Jr., Tennessee
JOEL HEFLEY, Colorado
JOHN T. DOOLITTLE, Cahfomia
WAYNE ALLARD, Colorado
RICHARD H. BAKER, Louisiana
KEN CALVERT, California
SCOTT McINNIS, Colorado
RICHARD W. POMBO, California
JAY DICKEY, Arkansas
John Lawrence, Staff Director
Daniel Weiss, Professional Staff Member
Richard Meltzer, General Counsel
Daniel Val Kish, Republican Staff Director
Subcommittee on Native American Affairs
BILL RICHARDSON, New Mexico, Chairman
PAT WILLIAMS, Montana CRAIG THOMAS, Wyoming, Ranking
SAM GEJDENSON, Connecticut Republican Member
ENI F H. FALEOMAVAEGA, American DON YOUNG, Alaska
Samoa RICHARD H. BAKER, Louisiana
TIM JOHNSON, South Dakota KEN CALVERT, California
NEIL ABERCROMBIE, Hawaii
KARAN ENGUSH, Arizona
Tadd Johnson, Staff Director
Marie Howard, Professional Staff Member
Steven J.W. Heeley, Counsel
June Lorenzo, Professional Staff Member
Barbara Robles, Clerk
William Johansen, Staff Assistant
Richard Houghton, Republican Counsel on Native American Affairs
(II)
CONTENTS
Page
Hearing held: October 5, 1993 1
Charts submitted by Mr. Richardson:
1. Share of Gaming HANDLE for Major Types of Gaming, 1991 and
J9g2 2
2. National Gaming ^\^N for Ms^^^^^^ 1992 4
3. Share of Gaming WIN for Major Types of Gaming, 1991 and 1992 5
Summary of Indian Gaming Regulatory Act 9
"Estimated Financial Trends in National and Indian Gaming: Tables and
Charts for a Briefing Book," compiled by Roger Walke, Analyst in American
Indian Policy, Government Division, Congressional Research Service 13
Member statements:
Hon. BiU Richardson 1
Hon. Craig Thomas 32
Hon. Neil Abercrombie 38
Hon. Ken Calvert 38
Hon. Tim Johnson 38
Hon. George Miller 88
Witness statements:
Hon. Daniel K. Inoviye, a U.S. Senator from the State of Hawaii, and
Chairman, Senate Committee on Indian Affairs 39
Prepared statement of Senator Inouye 43
Hon. John McCain, a U.S. Senator from the State of Arizona, and Vice
Chairman, Senate Committee on Indian Affairs 51
Prepared statement of Paul L. Maloney, Senior Counsel for Policy,
Criminal Division, Department of Justice, before Select Committee
on Indian Affairs, U.S. Senate, on March 18, 1992 53
Prepared statement of Senator McCain 62
Hon. WilUam J. Hughes, a Representative in Congress from the State
of New Jersey 66
Prepared statement of Representative Hughes 70
Hon. Marge Roukema, a Representative in Congress from the State of
New Jersey 77
"Was Mob Behind Tribe's Casino," New Jersey Law Journal, Septem-
ber 13, 1993 79
Prepared statement of Representative Roukema 84
Panel consisting of:
Jim E. Moody, Section Chief, Organized Crime/Drug Operations,
Criminal Investigative Division, Federal Bureau of Investigation .... 101
F*repared statement of Mr. Moody 103
Laurence A. Urgenson, Acting Deputy Assistant Attorney General,
Criminal Division, U.S. Department of Justice 113
Prepared statement of Mr. Urgenson 116
David B. Palmer, Deputy Assistant Commissioner for Criminal Inves-
tigation, Internal Revenue Service, accompanied by Peter G. Djinis,
Director, Office of Financial Management, Department of the
Treasury 126
Prepared statement of Mr. Palmer 129
Hon. Robert G. Torricelli, a Representative in Congress from the State
of New Jersey 162
Prepared statement of Mr. TorriceUi 165
Donald Trump, Chairman and President, Trump Organization, New
York, New York 175
Prepared statement of Mr. Trump 178
(III)
IV
Page
Witness statements — Continued
Donald Trump, Chairman and President, Trump Organization, New
York, New York— Continued
Information submitted to Chairman Richardson from Mr. Trump by
letter dated October 25, 1993 189
Transcript of Imus broadcast 243
'Torricelli gambUng bill a prize-winning insult" article 248
'The wrong way to fight competition" article 249
Affidavit of Richard M. Milanovich, Chairman, Agua Cahente Band
of CahuiUa Indians, and additional documentation 253
Panel consisting of:
Hon. Ada E. Deer, Assistant Secretary of Indian Affairs, Bureau
of Indian Affairs, U.S. Department of the Interior, accompanied
by Hilda A. Manuel, Director, Indian Gaming Management Staff,
and Theodore R. Quasula, Chief, Division of Law Enforcement 270
Prepared statement of Ms. Deer 272
Hon. Anthony J. Hope, Chairman, National Indian Gaming Commis-
sion 281
Prepared statement of Mr. Hope 283
Hon. Joel Frank, Commissioner, National Indian Gaming Commis-
sion '. 302
Michael D. Cox, General Counsel, National Indian Gaming Commis-
sion, accompanied by Hon. Jana McKeag, Commissioner 304
Panel consisting of:
Timothy Wapato, Executive Director, National Indian Gaming Asso-
ciation 308
Information regarding alleged incident of organized crime on
Cabazon Reservation submitted by Mr. Wapato 311
Prepared statement of Mr. Wapato 315
Richard James Elroy, Retired Special Agent, Federal Bureau of In-
vestigation 348
Prepared statement of Mr. Elroy 351
G. Michael Brown, President and CEO, Mashantucket Pequot Na-
tion's Foxwoods Casino and High Stakes Bingo, Ledyard, CT, ac-
companied by Lt. Col. Robert Root, Connecticut State Police 354
Prepared statement of Mr. Brown 357
"The Economic Impacts of the Foxwoods High Stakes Bingo &
Casino on New London County and Siurounding Areas" and
additional attachments to Mr. Brown's testimony 367
F. William Johnson, CEO, Mystic Lake Casino, Shakopee Sioux
Tribe, Prior Lake, MN, accompanied by PoUce Chief Dick Powell,
City of Prior Lake Police Department 444
Prepared statement of Mr. Johnson 448
APPENDIX
October 5, 1993
Additional material submitted for the hearing record fi-om:
Hon. Donald M. Payne, a Representative in Congress from the State
of New Jersey: Statement of support for the Ramapough Mountain
Indian Tribe 459
Hon. Benjamin A. Gilman, a Representative in Congress from the State
of New York: Statement of support for the Ramapough Mountain In-
dian Tribe 460
Seminole Tribe of Florida: Letter to Chairman Richardson from Hon.
James E. BilUe, Chairman, dated October 13, 1993 462
Chief Ronald "Redbone" Van Dunk, Chief of the Ramapough Mountain
Indians: Prepared statement and attachments 464
George L. Schneider, Counsel to the Ramapough Mountain Indian Tribe:
Prepared statement 474
O'Connor & Hannan, Attorneys at Law: Letters regarding Indian gaming
and Federal taxation ;■• 478
National Governors' Association: Letter to Senators Inouye and McCain
dated August 17, 1993 485
IMPLEMENTATION OF PUBLIC LAW 100-497,
THE INDIAN GAMING REGULATORY ACT OF
1988, AND RELATED LAW ENFORCEMENT IS-
SUES
TUESDAY, OCTOBER 5, 1993
House of Representatives,
Subcommittee on Native American Affairs,
Committee on Natural Resources,
Washington, DC.
The subcommittee met, pursuant to call, at 9:35 a.m., in room
1324, Longworth House Office Building, Hon. Bill Richardson
(chairman of the subcommittee), presiding.
STATEMENT OF HON. BILL RICHARDSON
Mr. Richardson. The committee will come to order.
Today we are taking testimony on the implementation of the In-
dian Gaming Regulatory Act of 1988. This is the fifth in a series
of oversight hearings the subcommittee has conducted on this sub-
ject.
I have asked that several charts be prepared for the committee
by the Congressional Research Service which indicate where Indian
gaming stands in relation to other types of legalized gaming na-
tionally.
[The charts follow:]
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Mr. Richardson. Chart one, illustrated as a pie, indicates the
percentage of "handle." "Handle" means the total of all wagers
made. This is the money which is bet and rebet or churned. Each
bet, whether the house wins or loses, is added to the "handle." Note
that Indian gaming, in blue, is only 4.6 percent of the "handle" in
the country while Nevada and Atlantic City-type casinos were at
76 percent in 1992.
Chart 2 shows the amount of "handle" in dollars. In 1992, non-
Indian casinos went over $250 billion in "handle" while Indian
gaming establishments were around $6 billion.
Charts 3 and 4 show the concept of "win." The "win" in gambling
means the revenues which go to the gaming facility after the cus-
tomer winnings are paid out. This is the equivalent to a non-gam-
ing business's gross revenues.
Chart 3 shows that lotteries and casinos combined made in ex-
cess of $20 billion in the "win" category while Indian gaming estab-
lishments won slightly over $1 billion in 1992. Again, as chart 4
shows, the Indian percentage of the "win" is only around 5 percent.
Indian gaming is governmental gaming. All of the revenues go
back into the reservations. Many other types of gaming on these
charts are for profit.
We have almost 100,000 Indians homeless or underhoused. Na-
tive Americans have the shortest lifespan and the highest rates of
suicide, tuberculosis, and diabetes. We have an unusual interest in
this hearing, and in the efforts of speeding up the proceedings, I
am going to insert into the record my statement and background
information and urge that our opening statements be relatively of
short duration.
[The prepared statement of Mr. Richardson and additional infor-
mation follow:]
OPENING STATEMENT OF CHAIRMAN RICHARDSON
October 5, 1993
The Committee will come to order.
Today we are taking testimony on the implementation of the Indian Gaming
Regulatory Act of 1988. This is the 5th in the series of oversight hearings the Subcommittee
has conducted on this subject.
I have asked that several charu have been prepared for the Committee by the
Congressional Research Service which indicate where Indian Gaming stands in relation to
other types of legalized gaming nationally.
Chart One, illustrated as a pie, indicates the percentage of "handle". "Handle" means
the total of all wagers made. This is the money which is bet and rebet or "churned". Each
bet, whether the house wins or loses, is added to the "handle". Note that Indian gaming, in
blue, is only 4.6% of the handle in the country whOe Nevada and Atlantic Qty type casinos
were at 76% in 1992. Chart Two shows the anaount o( "handle" in dollars. In 1992 non-
Indian casinos went over $250 billion in handle while Indian gaming establishments were
around $6 billion.
Charts three and four show the ccmcept oi "win". The "win" in gambling m^an^ the
revenues which go to the gaming facility after the custraner winnings are paid out This is
the equivalent to a non-gaming businesses "gross revenues". Chart Three shows that k}tteries
and casinos ctmbined made in excess of $20 btSion in the "win" categoiy while Indian
gaming establishments "won" less slightly over $1 biOicn in 1992. Again, as Chart Four
shows, the Indian percentage of the win is only around S%.
Indian gaming is governmental gaming. AH of the revenues go back into the
reservations. Many of the other types of gaming on uiese charts are fcM' profit
Indian gaming is a desperate remedy f(v a desperate situation. Abnost 100,000
Indians are homeless or underboused. Indians have the shortest life span and the highest
rates of suicide, tubercukxis and diabetes. Over half (rf the pec^le on reservations are
unempkiyed.
On maiy tcservatioas, Indian gaming has been a way out of the w(»st poverty in our
nation. The guniaf revenues are mandated to go back into governmental programs to
benefit the Indiu people. On the MiUe Lacs Reservation m Minnesota last week, a new
school was opened. The school was buih with gaming dollars and not ckk penny of federal
govenmient awistance. This is what the Act was meant to da Tnrfian tribes are
experiencing a new hope for the future, and a new hope ttriiicfa they have not felt in decades
or even centuries.
Many voices speak out vehemently against Indian gaming, but as a tribal leader told
me recently, "no one ever objected to the Indians being poor".
Today we will discuss law enforcement issues in Indian gaming. There has been a
hysteria surrounding Indian gaming from the begiiming. There have been allegations of
organized crime and money laundering rampant on reservations. Today, we will hear from
the law enforcement agencies charged with regulating Indian gaming and enforcing federal
laws on the reservations. We will also hear from tribal witnesses and private parties to get
their perspectives on law enforcement issues in Indian gaming.
This Subcommittee is committed to seeking the truth on these matters. These
allegations are quite significant and the Committee takes its oversight responsibilities very
seriously. If there is criminal activity in these gaining operationt, we need to know about
it and actively work to put a stop to it If the level of criminal activity is not at serious as
some allege, we must work to ensure that this industry is weQ regulated and the criminal
elements are kept in check. But we must begin by asking the questions • which is our
purpose today.
SUMMARY OF THE INDIAN GAMING REGULATORY ACT
On October 17, 1988, the President signed into law the Indian
Gaming Regulatory Act, Public Law 100-497, 25 U.S.C. 2701 et sea.
The Act provides a system for the regulation of gaming on Indian
lands by dividing gaming into three classes, establishing the
National Indian Gaming Commission to regulate Class II gaming and
authorizing compacts between tribes and states for the regulation
of Class III gaming.
Class I Gaming
Class I gaming includes social or traditional gaming which is
played in connection with tribal ceremonies or celebrations. Class
I gaming is regulated exclusively by the tribes.
Class II Gaming
Class II gaming includes bingo and, if played at the same
location as bingo, pull tabs, lotto, punch boards, tip jars, and
instant bingo. Class II gaming also includes card games which are
authorized by state law or not explicitly prohibited by state law
and played at any location in the state. The card games must be
played in conformity with state law or regulations regarding hours
of operation and pot limits.
A tribe may engage in Class II gaming if the state in which
the tribe is located permits such gaming for any purpose by any
person, organization or entity. Class II geiming is regulated by
the National Indian Gaming Commission and the tribe or solely by
the tribe if issued a certificate of self -regulation.
Class III Gaming
Class III gaming includes all gaming not included in Class I
or Class II, such as casino-type games, gambling devices, pari-
mutuel betting, etc.
Class III gaming is prohibited unless authorized by a tribal-
state compact.
Class III Gaming and Tribal-State Compacts
Class III gaming is lawful when it is authorized by a tribal
ordinance approved by the chairman of the Commission, is located in
a state that permits such gaming (whether for charitable,
conunercial, or governmental purposes), and is conducted in
conformance with a tribal-state compact which has been approved by
the Secretary of the Interior.
The Act authorizes an Indian tribe and the state in which the
tribe is located to enter a compact governing gaming activities.
The compact may include provisions concerning: the application of
10
tribal or state criminal and civil laws directly related to gaming,
the allocation of jurisdiction between the state and the tribe,
state assessments to defray the costs of regulating the activity,
taxation by the tribe in amounts comparable to state taxation,
remedies for breach of contract, standards for the operation and
maintenance of the gaming facility, and any other subjects related
to the gaming activity.
The state is not authorized to impose a tax or assessment
(except assessments that are agreed to) upon a tribe or person
authorized by a tribe to conduct a gaming activity. The state
cannot refuse to negotiate a compact based on its inability to
impose a tax, fee, or other assessment.
The federal districts courts are vested with jurisdiction
over: actions by Indian tribes arising from the failure of a state
to negotiate with a tribe seeking to enter a compact or to
negotiate in good faith, any action by a state or tribe to enjoin
a Class III activity which violates the tribal-state compact.
A tribe may initiate an action for failure to negotiate in
good faith against a state only after the passage of 180 days from
the date the tribe requested the state to enter negotiations for a
compact. If the court finds that the tribe has failed to negotiate
in good faith, it shall order the state and the tribe to conclude
a compact within 60 days.
If the state and the tribe fail to conclude a compact within
the 60-day period, the parties are to submit a court-appointed
mediator their last best offers for a compact.
The Secretary of the Interior is authorized to approve tribal-
state compacts. The Secretary may disapprove a compact if it
violates: the Act, any other federal law that does not relate to
jurisdiction over Indian gaming, or the trust obligations of the
United States to Indians. The compact takes effect once the
Secretary publishes a notice in the Federal Register that the
compact has been approved.
Gaming on Indian Lands after Enactment
Gaming is prohibited on land acquired by the Secretary in
trust for an Indian tribe after the date of enactment of the Act
unless: (1) the land is within or contiguous to the tribe's
existing reservation boundaries; or (2) if an Oklahoma tribe, the
lands are within the tribe's former reservation or the lands are
contiguous to other land held in trust or restricted status for
that tribe. This prohibition does not apply if the Secretary
determines that a gaming facility would be in the best interests of
the tribe and its members and would not be detrimental to the local
community and the governor of the state concurs with the
Secretary's determination. This prohibition also does not apply to
11
lands: taken in trust as part of a settlement of a land claim,
comprising the initial reservation of a tribe federally
acknowledged, or restored to a tribe that has been restored to
federal recognition.
National Indian Gaming Commission
Composition
The Commission is composed of three full-time members with the
Chairman appointed by the President and the other two members
appointed by the Secretary of the Interior. Two of the three
Commissioners must be members of federally recognized Indian tribes
and no more than two members can be of the same political party.
The Chairman of the Commission is Anthony J. Hope. The two
Commissioners are Jana McKeag and Joel Frank.
Powers of Chairman
The Chairman is empowered to: (1) issue temporary closure
orders; (2) levy civil fines; (3) approve tribal gaming ordinances;
and (4) approve management contracts. The Chairman is also vested
with such powers as the Commission may delegate.
Powers of the Commission
The Commission is vested with the following powers which
cannot be delegated: (1) approve the annual budget; (2) adopt
regulations for civil fines; (3) adopt an annual schedule of fees;
(4) authorize Chairman to issue subpoenas; and (5) permanently
close a gaming activity.
The Commission is vested with the following additional powers:
(1) monitor gaming activities; (2) inspect gaming premises; (3)
conduct background investigations; (4) inspect records related to
gaming; (5) use the U.S. mails; (6) procure supplies; (7) enter
into contracts; (8) hold hearings; (9) administer oaths, and (10)
promulgate regulations.
Tribal Self -Regulation
A tribe may petition the Commission for a certificate of self-
regulation if it has been engaged in a Class II activity
continuously for a three-year period with at least one of the years
being after the date of enactment of the Act and has otherwise
complied with the Act; The Commission may issue the certificate if
it is satisfied that the tribe has:
(1) conducted the gaming activity in a manner that has
resulted in an honest accounting of all revenues, has a reputation
for a safe and honest operation, and is generally free of evidence
of criminal or dishonest activity;
12
(2) adopted and is implementing an adequate system for:
accounting of revenues, investigation, licensing, and monitoring of
employees, and investigation, enforcement, and prosecution for
violations of its gaming laws; and
(3) conducted the gaming activity on a fiscally sound basis.
Management Contracts
The Chairman may approve a management contract if it provides:
(1) adequate accounting procedures; (2) access by tribal officials
to the gaming operations in order to verify the daily gross
revenues and income; (3) a minimum guaranteed payment to the tribe
that has preference over the retirement of development and
construction costs; (4) a ceiling for the repayment of such costs;
(5) a maximum term of 5 years or, at tribal request, 7 years; and
(6) grounds and procedures for terminating the contract.
The management fee cannot exceed 30 percent of the net
revenues unless the tribe requests a higher percentage. The
Chairman may approve a higher percentage, not to exceed 40 percent,
if a higher percentage is justified based on the capital investment
and projected income.
All existing ordinances and management contracts, whether or
not approved by the Secretary, must be submitted to the Chairman.
Commission Funding
The Commission is authorized to assess each gaune a fee which
is based on a sliding fee scale from one-half of one percent to two
and one-half percent on the first $1,500,000 of gross revenues and
up to five percent of amounts over $1,500,000. The total amount of
fees which the Commission can assess in any fiscal year is limited
to $1,500,000. The Commission is authorized to request
appropriations in an amount equal to the annual assessment.
Section 8. Thus, the commission's annual budget cannot exceed
$3,000,000 ($1,500,000 from assessments and $1,500,000 from
appropriations) . There is authorized to be appropriated in an
amount not to exceed $2,000,000 for the first fiscal year.
13
CRS
Congressional Research Service • The Library of Congress • Washington, D.C. 20540-7000
ESTIMATED FINANCIAL TRENDS IN
NATIONAL AND INDIAN GAMING:
Tables and Charts for a Briefing Book
Compiled by Roger Walke
Analyst in American Indian Policy
Government Division
October 4, 1993
14
Table 1. Estimated National Legal Gaining HANDLE ('Churned' Dollars), by Type of Gaming,
1982-1992
1M2 ie«3 IM4 U» I9M IM7
P«in
Hono - Tnck
Hones -OTB
Horac* - Subtotal
Gnyhounds - Track
Gnyhouoda - 0TB
Greyhounds - Subtoul
Toul • Perifliutuele
Loltenes
All Other Guno
Video Lotteries
Totsl - Lotteries
Cesinoe
SV/SJ Slot Mschlnes
NV/NJ Tebie Guses
Cruise Ships
Rjverbosts
Other Commert:ieJ
Ceeinos-
»9.990.62«,S72
»l.707^1.903
>II.697.900.47S
S2J08.S61.89S
I2J08.561.898
J622.7S2.3KI
I14.629.2».73«
M. 088.300.000
si4.400.ooo.oaa
S87.0O0.0Oa.0O0
$9,932,179,428
S1.71S.986.659
Sll.S48.166.aS6
S2.326.S46.934
SS61.369
S2.326.39S.303
S619.8a4.39l
$14,694,367,779
S 18.800.000.000
SS7JO0.0OO.0Oa
SI0.417.6l!k.960
Sl.766.4S2.79a
$12,183,071,760
$2,461,386,761
$e.631.S4S
$2,466,917,699
$666,869,006
$16,306,868,366
$23,792,860,563
S92.86S.783. 646
$10,486,397,644
S1.763.S60.97S
$12J40.248.622
$2,698,934,362
$4,423,618
$2,703,367,980
S663.96SJ72
$16,607,574,774
$10,481,686,728
$1,938,990,563
$12.420.67ej91
$3,009,193,413
$9,420 J61
$3.0 18.5 13.664
$667,575,369
$16,106,866,324
$26,182,148,083
S99.557.639.436
$28,503,598,369
$101,438,240,164
$11,007,987,415
$2,104,253,896
$13.112241.310
$3,190,892,997
$12,428,724
$3,203,321,721
$707,507,464
$17,023,070,495
$8,132,600,000 $10,213,260,000 $12,479,720,000 $13,140,292,000
S3Z794J63,961
$112,043,911,391
Total • Cesinoe
Legal Bookmaking
Sportsbooks
Horaebooks
Total - Legal Bookmeking
Canl Rooms
Bingo (other than on
Indian reservations]
Chantable Games
Indian ITsssi islloHS
Class n
Class m
Total — ladUn Ras.
TOTAL LEGAL
$101,400,000,000 $106,000,000,000 $I16.661.644J0S $126,739,667,619 $129,941,836,623 $144,838,166,342
$416,161,891 $692,019,766 S929.114.79S $886,867,210
$122,800,048 $160,326,188 S1S4.367232 $243,249,092
$637,970,939 SS62344.944 $1,113,482,030 Sl.129.106.302
$1,000,000,000 $1,062,000,000 Sl.066.000.000 $1,096,960,000
$3,000,000,000 S3.070.0Oa.0OO $3,164,118,000 $3,437,988,620
$1200.000.000 $1,400,000,000 $1,640,000,000 $1,681,680,000
$126,766,506,675
— — $250,000,000
$132,139,912,723 $146,972,602,693 $169.166267216
$898,939,394 Sl.014.319.728
$290. 180.529 $366,564,366
$1,189,119,923 $1,379,884,084
$1,118,889,000 $3,125,000,000
$3,599,574,086 $3,977,169,407
$1,789,307,520
$286,714,286
$166,611,028,661
S2.0O2. 960.838
$314JS6.714
$186,800,817,880
Sourt:e: Annual estimates prepared by ChristiansenyCununin^ Assocdates, Inc., for Gaming & Wagering Business
magazine's July 15-S«pt. 14 issues, 1989-1993. Most recently revised figures used.
Notes: • "Other Commertnal Casinos" includes all commercial land -based casinos that are not in Nevatla or New Jersey
and are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in
Colorado.
•• "Non-Casino Gaming Devices" includes gaming devices in State-regulated non-casino establishments such as
bars, restaurants, stores, etc.
OTB = Off-Track Bettmg
15
Table 1. Estimated National Legal Gaming HANDLE ('Churned' Dollars), by Type of Gaming,
1982-1992
PanmuluelB
Hocaf ■ Track
Hoi»> . OTB
Horses - SubtoUj
Greyhounds - Trmck
Greyhounds - OTB
Gniyhounds - Subtotal
Jsi-alai
ToUl - Psximutuels
All Other Games
Video Lotteries
Total - Lotteries
NV/NJ Slot Machines
NV/NJ Table Games
Cnjise Ships
Riverboata
Other Commercial*
Non-Casino Devices**
Total - Casino*
Legal Bookmaking
Sporlabooka
Horsefaooks
Total • Legal Bookmaking
Card Rooms
til. 181.073.866
IZ487.088.e21
SI3.668. 162.387
83.246.422,210
$16.SS0.28S
$3,262,972,496
$639,224,435
$17,570,369,317
$10,312,606,882
$3,417,069,719
$13,929,576,601
$3,183,112,602
$28,571,564
$3,211,684,166
$552,746,477
$17,694,007,244
$17,051,880,000 $19,488,330,000
$67,667,092,665 $65,790,588,454
$126,295,623,085 $127,774,754,003
$1,762,500,000
$23,141,217
$230,000,000 $249,874,874
$184,192,716,740 $195,600,858,548
$1,317,304,075 $1,434,952,978
$414,563,172 $403,178,763
$1,731,867,247 $1,838,131,741
$3,453,125,000 $7,564,918,000
$3,670,167,867 $3,794,482,916
$10,414,964,557
$3,721,698,942
$14,136,653,499
$3,438,744,803
$26,886,215
$3,466,631,018
$666,627,881
$18,157,912,398
$9,863,556,679
$4,028,593,038
$13,892,149,717
$3,463,487,796
$38,898,771
$3,602,386,567
$488,368,157
$17,882,904,441
$20,734,834,000 $20,678,640,000
$281,946,000 $354,842,000
$21,016,780,000 $20,933,482,000
$76,166,608,629
$161,638,696,232
$3,708,296,000
$3»4,S67,261
$306,800,000
$242,204,966,122
$84,398,462,227
$149,744,002,493
$4,076,676,000
$1,099,431,461
$771,022,759
$363,603,126
$240,463,097,066
$1,672,279,393 $1,871,063,086
$483,530,637 $392,124,903
$2,156,810,530 $2,263,187,989
$8,378,107,000 $8,399,639,000
$4,071,613,000 $4,230,164,000
$9,633,550,092
$4,677,706,686
$14,111,265,778
$3,242,150,864
$62,229,466
$3,304,380,320
$426,890,129
$17,841,526,227
$23,036,474,000
$1,326,363,000
$24,361,827,000
$94,567,329,008
$143,100,618,577
$4,280,608,760
$7,319,681,198
$3,078,234,749
$667,447,916
$262,893,820,498
$1,800,782,918
$307,612,279
$2,108,296,197
$8,428,086,000
$4,306,214,000
Charitable Gamta
Indian Resarvations
Class n
Class m
Total — Indian Raa.
TOTAL LEGAL
$3,581,133,231 $4,222,352,352 $4,467,407,000 $4,606,898,000
$1,294,000,000 $1,397,500,000
$1,346,100,000 $4,038,260,000
$2,640,100,000 $6,435,760,000
$303,092,696,050 $304,204,122,486
$345,714,286 $1,000,000,000
$231,596,962,688 $251,203,080,800
$4.774.84 1 000
$1,430,000,000
$13,744,500,000
$15,174,600,000
$329,889,108,922
Annual estimates preparetl by ChhstiansenyCtimmings Associates, Inc.. for G<xming & Wagering Business magazine's
July 15-Sept. 14 issues, 1989-1992, and July 15-Aug. 14, 1993, issue. Most recently revised figures used.
* "Other Commercial Casinos" includes all commennal land-based casinos that are not in Nevatla or New Jersey and
are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in
Colorado.
•• "Non-Casino Gaming Devices" includes gaining devices in State-regulated non-casino establishments such as bars,
restatirants, stores, etc.
OTB = Off-Track Betting
16
Table 2. Changea In National Legal Gaming HANDLE ("Churned' Dollars), by Type of Gaming,
1982-1992 and 1985-1992
Overall Average Annual
Percent Change: Percent Change:
1982 to 1992 1982 to 1992
Overall Average Annual
Percent Change: Percent Change:
1985 (or later 1985 (or later
year) to 1992 year) to 1992
PwinutueU
Mono ■ Tnck
Hono OTB
HonM - Subtoul
Greyhouoda • Track
Grayhounda • OTB
Greybounda • Subtotal
Total • Panmutuola
AU Other Canca
Video Lotteriee
Total ■ Lotteriee
NV/NJ Slot Machlnee
NV/NJ Table Ganiee
Cruiae Shipe
Other Commercial Caainoe*
Non-Caeino Gaming Devices*'
Total • Caaioee
Legal Bootrmelring
Sportebooka
Hotvebooka
Total - Legal Bookntakiog
Card Rooma
Bingo (other than on Indian
leaervational
Charitable Gamea
Indian Raeei laUona
CUaan
Claaain
ToUl — Indian Rm.
TOTAL LEGAL
IM I3«
20.63%
46.10%
11.106.36%
49.62%
.0161%
22-80%
SS6 66%
64.40%
333.7S%
150.40%
291.90%
742.61%
43.S4%
297.90%
162.33%
-0.47%
-9.09%
10.37%
161.01%
1.89%
16.29%
3.91%
20-13%
69.07%
1.306.75%
4.11%
22.23%
■3.73%
-35.86%
207%
14 31%
_
11 10%
-
370.43%
19.54%
138 53%
20.71%
261.16%
5.10%
43.74%
-
14287%
-
566.77%
-
13.201.96%
-
14237%
9.67%
101.12%
15.30%
103^8%
9.61%
26.42%
14.64%
86,72%
23.76%
668.32%
36«%
26.26%
10.51%
921.06%
6.969.80%
107 jn%
■136%
14.69%
2.05%
2.66%
46.89%
2.91%
•S.15%
1.93%
6.40%
1 16 89%
13.22%
20 14%
5.32%
34 42%
666.77%
410.47%
24.77%
10,50%
10.67%
3,41%
9-33%
33.82%
321%
16 08%
6.12%
21964%
79.78%
10.97%
Source: Calculated by CRS from annual estimates prepared by Cbristiansen/Cummings Associates, Inc. for Gaming &
Wagenng Business magazue's July 15-Sept. 14 issues, 1989-1993. Most recently revised figures used.
Notes: * "Other Commerciai Casinos' includes all cnmmerdal land-based casinos that are not in Nevada or New Jersey and
are not on Indian reservations. Examples of such casinos are those m Deadwood, SO, and in certain towns in
Colorado.
•• "Non-Casmo Gaming Devices" mcludes gaming devices in State-regulated non-casino establishments such as bars,
restaurants, stores, etc
OTB = Off-Track Betting
17
Table 3. Each Gaming Type's Share of National Legal Gaming HANDLE CChumed" Dollars). 1982-1992
~~^~ 1982 1983 1984 1985 liie 1987 lisi 1989 1990 1991 1992
Panmutuels
Horses • Track
Horses - 0TB
Horses - Subtotal
Greyhounds - Track
Greyhounds - 0TB
Greyhounds - Subtotal
Jai-alai
Total - Parimutuels
Total - Lotteries
Casinos
NV/NJ Slot Machines
NV/NJ Table Games
Cruise Ships
Riverboats
Other Commercial
Non-Casino Devices
Total - Casinos
Legal Bookmaking
Sportsbooks
Horsebooks
Total - Legal Bookmaking
Card Rooms
Bingo [other than on Indian
reservations]
Charitable Gaines
Total — Indian
Reservations
TOTAL LEGAL
7.94% 7.52% 7.09%
1.36% 1.30% 1.20%
9.30% 8.82% 8.29%
1.76% 1.76% 1.67%
1.76% 1.76% 1.67%
0,50% 0.47% 0.45%
11.55% 11.04% 10.41%
3.25% 3.91% 5.53%
11.45% 14.23% 16.19% 16.45% 17.12% 17.65% 24.90% 26.19% 25.13% 27.74% 28.66%
69.18% 65.99% 63.19% 62.55% 60.92% 60.30% 54.53% 50.87% 53.33% 49.23% 43 38%
— — — — — — — 0.70% 1.22% 1.34% 1.30%
— — — — — — — — — 0.36% 2.22%
— — — — — — — 0.01% 0.13% 0.25% 0.93%
— — — — — — 0.10% 0.10% 0.10% 0.12% 0.17%
80.63% 80.22% 79.38% 79.00% 78.04% 77.95% 79,53% 77.87% 79.91% 79.04% 76.66%
6.59%
6.29%
5.92%
4.83%
4.18%
3.44%
3.24%
2.89%
1.10%
1.16%
1.13%
L07%
1.36%
L23%
1.32%
1.39%
7.69%
7.46%
7.06%
5.90%
5.55%
4.66%
4.57%
4.28%
1.70%
1.81%
1.72%
1.40%
1.27%
1.13%
1.14%
0.98%
—
0.01%
0.01%
0.01%
0.01%
0.01%
0.01%
0.02%
1.70%
1.81%
1.72%
1.41%
1.28%
1.14%
1.15%
1.00%
0.42%
0.40%
0.38%
0.28%
0.22%
0.18%
0.16%
0.13%
9.81%
9.67%
9.16%
7.59%
7.04%
5.99%
5.88%
5.41%
6.42%
7.49%
7.07%
7.36%
7.76%
6.93%
6.88%
7.38%
0.33%
0.52%
0.63%
0.56%
0.54%
0.10%
0.12%
0.13%
0.15%
0.17%
0.43%
0.65%
0.76%
0.71%
0.71%
0.80%
0.80%
0.72%
0.69%
0.67%
2.39%
2.32%
2.15%
2.16%
2.16%
0.95% 1.06% 1.05%
0.55% 0.57% 0.57%
0.20% 0.18% 0.16%
0.74% 0.75% 0.73%
1.68% 1.49% 3.01%
il4% 1.58% L51%
1.06% 1.07% 1.08% 1.55% 1.68%
0.16% 0.17% 0.17% 0.15% 0.40%
0.55% 0.62% 0.55%
0.16% 0.13% 0.09%
0.71% 0.74% 0.64%
2.76% 276% 2.55%
1.34% L39% L31%
1.47% 1.51% 1.45%
0.87% L79% 4.60%
100.0% 100.0% 1000% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: Calculated by CRS from annual estimates prepared by Christiansen/Cummin^ Associates, Inc., for Gaming & Wagering
Business magazine's July 15-Sept. 14 issues, 1989-1993. Most recently revised figures used.
Notes: • "Other Commercial Casinos" includes all commercial land-based casinos that are not in Nevada or New Jersey and
are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in Colorado.
•• "Non-Casino Gaming Devices" includes gaming devices in State-regulated non-casino establishments such as bars,
restaurants, stores, etc.
OTB = Off-Track Betting
18
Table 4. Estimated National Legal Gaming WIN (Gross Revenues), by Type of Gaining,
1982-1992
PtnmutueU
Hono Trmck
Hoim OTB
HorwM ■ SubloUi
Gnyhound* • Track
Grayhounds - OTB
Gnylwund* - SubtouJ
ToUl — Puimulueb
Lotteries
All Other Gemcs
Video LoUerio
ToleJ — Lotuna
NV/NJ Slot Meohino
NV/NJ Table Gemee
Cniiee Shipe
Rjverboela
SI.S6O.00a,000
(400.000.000
lZ2M.ooo,ooa
S430.ooo.oao
(430,000.000
1112.000.000
S2. 792.000.000
S1.867.3IS.000
S40 1.640.644
S2.25S.8SS.644
S4&3.&40.152
SO
S4U.S40.162
S11I.S64.790
S2.S23.963.S86
S1.94S.089. 136
S40S.9I6.009
S2.357.005. 145
S47S.020.221
Sl.OSI.OSl
S479.071.272
S122.090.OI2
S2.958. 166.429
SI.980.8S0.496
S409.267.26S
S2.390. 147.764
S626.292.201
$640,487
S627.132.GS8
S129.3S4.980
S3.D46.666.432
S 1.979.990.434
S452.S60.397
S2.432.550.831
S686. 792.716
S 1.789.848
S6S8.S82.S64
S130.108.421
S3.IS1.241.816
S2.176.201.lll
S482.226,76S
S2.6S8.427.S79
S620.947.777
S2.423.369
S623.371.146
S 137.75 1.703
S3.419.S60.72a
$2,170,000,000 S3.044.0OO.0OO S4. 147.575.000 S5.208.772.800 S6.334.406.359 $6,581,972,263
S2.000.000.000
S2j;oo.ooo.ooo
S2.35S.0O0.0OO $2,647,333,012 S2.904.619.182 $3,153,117,000 S3.SS4.S2S.000
$2,252,000,000 S2.400.194.79S $2,543,614,412 $2,590,901,883 SZ81 1.01 1.000
ToteJ — Cesiooe
Sportsbooka
Horaeboolu
Totel — Legal Bookmeldng
Cerd Roome
Bingo [other then OD Indieo
reeervetionel
Cberiteble GeiDce
Indian Reeei lalloae
cum n
Clmam IH
TOTAL LEGAL
$4,200,000,000 K610.000.000 $6,047,527,810 $6,448,233,594 SS.744.018.8S3 $6,395,839,000
$7,724,862
$13,037,685
$25,762,547
$60,000,000
$780,000,000
$19,250,974
$24,262,825
$43,513,799
$62,000,000
$798,000,000
$21,634,417
$31,212,619
$52,747,036
$53,260,000
SS17.862.797
$21,947,393
$39,056,828
$61,004,221
$54,847,500
$910,035,688
$35,598,000
$45,007,000
$80,605,000
$55,944,450
$941,648,581
$29,821,000
$55,383,000
$86,204,000
$260,000,000
SS94.863.117
$396,000,000 $464,000,000 $539,000,000 S682.000.000 SS05.S37.236 $674,846,891
- - - $87,500,000 SIOO.OOO.OOO $110,000,000
$10,413,762,547 $11,834,477,365 $13,616,129,072 $16,399,059,135 $16,913,702,325 $18,312.275990
Source: Anntial estimates prepared by ChnstJansenyCiimmings Associates. Inc., for Gaming & Wagering
Business magazine's July 15-Sept. 14 issues, 19S9-1993. Most recently revised figures used.
Notes: * "Other Commertnal Casinos' includes all co.timerdal land-based casinos that are not in Nevada or
New Jersey and are not on Intlian reservations. Examples of such casinos are those in Deadwood. SD,
and in certain towns in Colorado.
** *Non-Caaino Gaming Devices" includes gaming devices in State-regtilated non-casino establishments
such as bars, restaurants, stores, etc.
OTB = Off-Track Betting
19
Table 4. Estimated National
Legal Gaming WIN (Gross Revenues), by Type of Gamine
1982-1992
ia«8
1988
1990
19SI
1902
Parimuluela
Horse. . Truk
$2,262,497,269
$2,089,381,419
$2,090,342,557
J 1.976,45 1.169
$1,939,309,121
Honws . 0TB
1509.750,996
$734,302,421
$806,503,403
$865,005,296
$969,662,063
Horeea - SubtotAi
$2,762,248,265
$2,823,683,840
$2,896,845,960
$2840.466.464
$2908,871,184
Greyhounds - Track
$625,017,715
$627,243,054
$691,774,030
$701,246,641
$675,367,175
Greyhounds ■ OTB
$3,231,734
$5,427,066
$6,087,339
$7,416,330
$12,711,226
Greyhounds - SubtoUi
$628,249,449
$632,670,120
$696,861,369
$708,662,971
$688,078,400
Jsi-diU
$124,187,617
$107,766,036
$113,131,625
$100,343,331
$89,264,492
Tolsl — Psumutuol.
$3,514,686,331
$3,564,119,996
$3,706,838,854
$3,649,462,766
$3,686,214,076
LottoHes
All Olher Gimta
-
-
$10,192,418,000
$10,105,539,000
$11,214,733,000
Video LoltencM
-
-
$96,462,000
$121,841000
$242230,000
ToUl — UlUne.
Casinos
J8.423.628.720
$9,599,360,000
$10,288,880,000
$10,227,381,000
$11,466,963,000
NV/NJ Slol Mjchinoi
$4,006,823,000
$4,360,125,000
$4,890,301,000
$6.242299.000
$6,830,586,443
NV/NJ Table Camea
$3,054,030,000
$3,103,516,000
$3,412,892,000
$3,200,968,000
$3,120,137,399
Crujse Ships
-
$170,000,000
$260,759,000
$290,887,000
$306,431,350
Riverboata
-
-
-
$79,686,780
$418,021,561
Other Commercial
-
$2,140,293
$31,972,405
$63,912,237
$224,300,143
Non-Caaino Gaming
Devices**
$96,770,000
$107,443,693
$132,613,300
$167,680,407
$242172,466
Tolal — Casinos
$7. 156.623.000
$7,733,224,986
$8,728,537,706
$9,036,432,424
$10,140,649,362
Legal Bookjsaldng
Sportsbooka
$42,022,000
$46,775,000
$48,799,000
$62300.000
$60,601000
Horsobooka
$61,687,000
$69,993,000
$76,466,867
$66,079,878
$46,799,000
Tolal - Ug.1 Bookmaking
$103,709,000
$106,768,000
$125,254,867
$107,379,878
$97,401,000
Card Rooma
$276,250,000
$695,510,064
$667,593,000
$659,114,000
$660,811,000
Bingo [other than on Indian
reservationat
$1,056,103,272
$947,600,236
$1,019,194,000
$1,064,613,000
$1,090,944,000
Charitable Games
$712,409,564
(I.114.337.S78
$1,194,044,000
$1,230,120,000
$1,298,949,000
Indian RaMmUona
Class a
-
-
S3S«,20a,000
«4 19.260.000
$429,000,000
CUaain
-
-
(100,300,000
$300,900,000
$1,069,940,000
Total — Indian
Raaarvntions
$121,000,000
$300,000,000
$488,600,000
$720,160,000
$1,498,940,000
TOTAL LEGAL
$2I.3S3.40».877
$23,969,821,159
$26,208,842,416
$26.6a3, 663,068
$29,930.871,43»
Source: Annual estimatea prepared by Chriatiansen/C
Buainesa magazme's July 15-Sept. 14 issues,
Notes: • "Other Commercial Casinos' ineluiiea all r
lummings Associates, Inc., for
Gamine & Waeerinr
1989-1993. Most recently revised Ggtlres used.
■ — --— ™o."»i uuiu-wuKni auunae mat are not in nevada or
New Jersey and are not on Indian reservations. Eiamples of such casinos are those in Deadwood. SD
and m certain towns in Colorado.
•• 'Non-Casino Gaming Devices' includes gaming devices in State-regulated non-casino establishments
such as bars, restaurants, stores, etc.
OTB = Off-Track Betting
20
Table 3. Changes in National Legal Gaming WIN (Gross Revenues), by Type of Gaming,
1982-1992 and 1985-1992
Overall Percent Annual Average Overall Average Annual
Change: Percent Change: Percent Change: Percent r-hange:
1982 to 1992 1982 to 1992 1985 (or later 1985 (or later
year) to 1992 year) to 1992
HorK> - Tr>ct
Hoi»»aTB
Horacs -SubtoUj
Greyhounds • Track
Greyhounda • OTB
Greyhounds - Sublotsl
Jsi sisi
Total — Psnmuluels
Lotteries
All Othsr Gsnas
Video Lotteries
Tolsl — Lotteries
Caair
NV/NJ Slot Madiines
NV/NJ Table Gaaus
Cmise Ships
Riverhosts
4M%
142.39%
29.2«*
57.06%
1.109.38%
SO 02%
20 30*
32.03%
191.53%
4182%
0.47%
9.26%
260%
4.62%
36 56%
4.81%
-2.24%
2.82%
11.29%
3.56%
-210%
136.90%
21.70%
28.33%
1.412.36%
30.53%
-3101%
20.99%
10.03%
151.11%
119.96%
100,73%
22.67%
79.67%
424.59%
10.379,88%
0,30%
13.11%
285%
3.63%
47.41%
3.88%
■5.16%
276%
4.90%
58.47%
1192%
10.47%
2.96%
21.57%
424 59%
371.47%
Non-Casino Gaining
Devices"
Total — (dittos
Legal BoolUDsking
Sportabooks
Horsebooka
Total — Legal Bookraaking
Card Rooms
Bingo father than on Indian
Charitable Games
Indias RsssrvsUons
Class n
Class m
TotsJ — ladUa
TOTAL LEGAL
555 05%
159.45%
278.07%
1.221.62%
39.86%
228.02%
20.68%
10.00%
14.22%
29.45%
3.41%
1261%
15187%
130.56%
19.82%
59.66%
1,104.82%
19.88%
12^.19%
10.51%
966,74%
1.613,07%
26,10%
12.67%
262%
6.91%
42.70%
262%
1216%
5.12%
226.61%
50.06%
CaltnjJated by CRS from annual estimates prepared by ChnstiansenyCummings Associates, Inc.. for
Gaming & Wagering Business magazine's July 15-Sept. 14 issues, 1989-1993. Most recently revised
figures tjsed,
* -Other Commercial Casinos" includes all commercial land-based casinos that are not ui Nevada
or New Jersey and are not on Indian reservations. Examples of such casinos are those in Deadwood,
SD, and in certain towns in (Colorado.
•• -Non-Casmo (5ammg Devices' includes gaming devices in Sute-regulated non-casino
establishments such as bars, restaurants, stores, etc.
OTB = Off-Track Betting
21
Table 6. E^ach Gaining Type's Share of National Legal Gaming WIN (Gross Revenues), 1982-1992
1982
1983
1984
1985
1986
1987
1988
1989
1990
I99I
1992
Parimutuela
Horses - Track
17.76%
15.69%
14.31%
12.86%
1L71%
1L88%
10.54%
8.72%
7.98%
7.45%
6.48%
Horses - 0TB
3.84%
3.39%
3.00%
2.66%
268%
2.63%
2.39%
3.06%
3.08%
3.22%
3.24%
Horses — Subtotal
21.61%
19.09%
17.31%
15.52%
14.38%
14.52%
12.93%
11.79%
11.05%
10.66%
9.72%
Greyhounds - Track
4.13%
3.83%
3.51%
3.42%
3.47%
3.39%
2.93%
262%
2.64%
i66%
226%
Greyhounds - 0TB
0.01%
0.01%.
0.01%
0.01%
0.02%
0.02%
0.02%
0.03%
0.04%
Greyhounds —
4.13%
3.83%
3.52%
3.42%
3.48%
3.40%
294%
2.64%
266%
269%
230%
Subtotal
Jai-alai
1.08%
0.94%
0.90%
0.84%
0.77%
0.75%
0.58%
0.45%
0.43%
0.38%
0.30%
Total — Parimutuels
26.81%
23.86%
21.73%
19.78%
18.63%
18.67%
16.45%
14.88%
14.14%
13.73%
12.32%
Total — Lotteries
20.84%
25.72%
30.46%
33.83%
37.45%
35.94%
39.43%
40.06%
39.26%
38.26%
38.28%
Casinos
^fv/NJ Slot
19.21%
19.92%
19.44%
18.86%
18.64%
19.58%
18.76%
18.16%
18.66%
19.61%
19.48%
Machines
NV/NJ Table Games
21.13%
19.03%
17.63%
16.52%
15.32%
15.35%
14.30%
12.95%
13.02%
11.98%
10.42%
Cruise Ships
—
—
—
—
—
—
—
0.71%
0.99%
L09%
L02%
Riverboats
—
—
-
-
-
-
-
—
-
0.30%
1.40%
Other Conunerdal
_
_
—
—
_
—
_
0.01%
0.12%
0.24%
0.75%
Casinos'
Non-Casino Gaming
—
—
_
—
—
_
0.45%
0.45%
0.51%
0.59%
0.81%
Devices"
Total — Casinos
40.33%
38.95%
37.07%
35.38%
33.96%
34.93%
33.50%
32.28%
33.30%
33.80%
33.88%
Legal Bookmaking
Sportsbooks
0.07%
0.16%
0.16%
0.14%
0.21%
0.16%
0.20%
0.19%
0.19%
0.20%
0.17%
Horsebooks
0.17%
0.21%
0.23%
0.25%
0.27%
0.30%
0.29%
0.25%
0.29%
0.21%
0.16%
Total — Legal
0.25%
0.37%
0.39%
0.40%
0.48%
0.47%
0.49%
0.44%
0.48%
0.40%
0.33%
Bookmaking
Card Rooms
0.48%
0.44%
0.39%
0.36%
0.33%
1.37%
1.29%
2.49%
2.51%
2.47%
2.21%
Bingo (other than on
7.49%
6.74%
6.01%
5.91%
5.57%
4.89%
4.94%
3.95%
3.89%
3.99%
3.64%
Indian reservations]
Charitable Games
3.80%
3.92%
3.96%
3.78%
2.99%
3.14%
3.33%
4.65%
4.56%
4.65%
4.34%
Total — Indian
_
_
_
0.57%
0.59%
0.60%
0.57%
1.25%
1.86%
2.69%
5.01%
Reservations
TOTAL LEGAL
100.0%
100.0%
100.0%
100.0%
100 0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Calculated by CRS from annual estimates prepared by Christiansen/CummingB Associates, Inc., for Gaming & Wagering
Business magazine's July 15-Sept. 14 issues, 1989-1993. Most recently revised figures used.
* "Other Commercial Casinos" includes all commercial land-based casinos that are not in Nevada or New Jersey and
are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in Colorado.
•• "Non-Casino Gaming Devices" includes gaming devices in State-regulated non-casino establishments such as bars,
restaurants, stores, etc.
0TB = Off-Track Betting
22
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32
Mr. Richardson. With that, I would Uke to recognize the rank-
ing member of our subcommittee.
STATEMENT OF HON. CRAIG THOMAS
Mr. Thomas. Thank you, Mr. Chairman. I heard you. I will also
insert mine in the record. I think it is very important that we have
this hearing. This is the fifth one.
It seems to me, and I am not an old hand at this issue, but it
does seem to me there are a number of issues that, as we move for-
ward, need to be clarified. One, I suppose, is the notion among gov-
ernors and others that there is absolutely no control over what the
tribes do, and obviously that is not true. Under the arrsingements
the tribes do only what can be done in the State.
On the other hand, I think there is some feeling among some of
the tribes that they shouldn't have any restrictions at all, and I
don't think that is a realistic notion.
So, somehow we need to get those things somewhat clarified.
In any event, I am delighted to have this hearing, and I espe-
cially want to welcome our witnesses, our counterparts from the
Senate.
Grentlemen, it is nice to have you here, and I look forward to your
testimony.
Thank you, sir.
[Prepared statement of Mr. Thomas follows:]
33
Statement of the
Honorable Craig Thomas of Wyoming
ON
Oversight of the I.G.R.A
October 5, 1993
Thank you Mr. Chairman.
I am pleased to take part in this, the fifth in a series of
oversight hearings on the Indian Gaming Regulatory Act.
I think that it is vitally important that we as a body fully
examine all facets of this issue before moving on to
considering any legislation.
As you know, I am fully committed to the goals and
objectives of the Indian Gaming Regulatory Act. Gaming
in Indian country since the enactment of IGRA has resulted
in unparalleled economic growth, both for the tribes and for
34
their surrounding non-Indian communities. Once poverty-
stricken tribes have picked themselves up by their boot-
straps and are now providing educational, employment,
economic, and social benefits to their members. In
addition, gaming has produced a beneficial ripple effect in
many local economies.
While IGRA has, in my opinion, worked well in its present
form, it is clear that some recent developments require that
we reexamine the Act to fine-tune It. While there are some
issues that we need to address ~ the issue of good-faith
compacting, for example ~ there are others which have
been raised as canards by opponents of Indian gaming
and which I believe we need simply to refute and subse-
quently discard.
Among these is the allegation that Indian gaming is being
significantly infiltrated by organized crime. Although
opponents of Indian gaming have consistently made this
allegation, their contention lacks both specifics and proof.
I have seen no credible evidence to back up their asser-
tion. In fact, the Department of Justice has repeatedly
stated that this is simply not the case. I look forward to the
testimony of the representatives from the FBI, DO J, and
IRS on this issue today, and hope that it will lay to rest
these accusations once and for all.
Another fiction put forward by the opponents of Indian
gaming Is that the tribes have been somehow provided an
unfair competitive advantage over other citizens. However,
our tragic treatment of Indian people over the years has
placed them at a severe disadvantage both economically
36
and socially: 31% of Indian people live In poverty; Native
Americans are three times as likely to be unemployed as
non-Indian people; tubercolosis levels are 480% higher
than for the general population, alcoholism 388% higher,
diabetes 169% higher, and suicides 300% higher. Given
these figures, even if we had intended IGRA to give the
tribes such an economic edge I could not characterize it as
unfair.
In any event, I would note that triabi gaming enterprises
are subject to many legal limitations which non-Indian
enterprises are not. Only Indian gaming is subject to
federal oversight and regulation. Only Indian tribes are
required to negotiate with state governments before they
can engage in any form of casino-type gaming. Only
Indian tribes are required to spend their gaming income
37
solely for tribal governmental purposes and not for private
business profit.
In closing, Mr. Chairman, I would like to welcome our
witnesses today -- especially our counterparts from the
other body Senators Inouye and McCain. I look fonA/ard to
their testimony. In addition, at this point I have several
documents that I would like to submit for inclusion in the
record.
Thank you, Mr. Chairman.
38
Mr. Richardson. The chair recognizes the gentleman from Ha-
waii.
STATEMENT OF HON. NEIL ABERCROMBIE
Mr. ABERCROMBIE. Thank you, Mr. Chairman.
Mr. Chairman, my remarks will consist only of welcoming Sen-
ator Inouye here, not only as a colleague but as a mentor of some,
more than three decades now. Senator, since I first shook your
hand on the comer of Kapewani Boulevard. We have seen a lot of
changes since then.
But one of the changes that are most important, Mr. Chairman,
for purposes of this hearing is that Senator Inouye has led the way
in this Nation in contemporary times to see to it that Native Amer-
ican affairs receive the kind of legislative attention and redress
that was necessary.
I don't believe that it is possible to cite anyone else in the Nation
in our legislative history that has shown more concern and taken
more practical advantage of the opportunity to lead than Senator
Inouye has.
So I, as one of those who has not only followed his career but
been the beneficiary of his legislative expertise, am very, very
happy to be here serving on this subcommittee as a counterpart to
the leadership that he has provided in the United States Senate.
Mr. Richardson. The chair recognizes the gentleman from Cali-
fornia.
STATEMENT OF HON. KEN CALVERT
Mr. Calvert. Thank you, Mr. Chairman. I have a brief state-
ment.
Coming from a State which has the largest number of federally-
recognized Indian tribes in the Nation, I am particularly concerned
about the potential for organized criminal activity and corruption
when gaming operations are not properly regulated. Let me hasten
to add that I support the legal right of Indian tribes to offer various
games of chance on the reservations as long as those games are
consistent with State law and as long as they are properly regu-
lated.
There are several Indian tribes in California that currently have
extremely well-run gaming operations to promote economic devel-
opment, self-sufficiency, and strong tribal government. I support
those operations. My interest is simply to make certain that all
gaming operations on Indian lands are free of corrupting influence,
to ensure that the tribes, not outsiders, are the primary bene-
ficiaries, and that the State of California is not saddled with in-
creased costs of law enforcement and regulation.
When it comes to Indian gaming, I want the Indians and people
of California to be winners and not forces of organized crime.
Thank you, Mr. Chairman.
Mr. Richardson. I recognize the gentleman from South Dakota.
STATEMENT OF HON. TIM JOHNSON
Mr. Johnson. Thank you, Mr. Chairman. I commend you for
holding this very timely and critically important hearing. I wel-
come the members of the panel, who I know will ail make very
39
positive contributions to the dialogue on this ongoing debate that
we have over the role of Indian gaming and its relationship with
the various States.
In the State of South Dakota, we have nine Indian reservations.
We have ongoing, very active gaming operations. The negotiation
with the State has sometimes been a bit rocky but, on the whole,
has worked itself out fairly well.
I think it is regrettable in some respects that gaming seems to
be such a major engine for economic development and job oppor-
tunity on Indian reservations, but after over 100 years of virtually
utter failure in my State of South Dakota developing other kinds
of economic opportunities, I would have to say that at this point
we have over 1,000 Native Americans employed in the gaming in-
dustry, generating a large amount of revenue for tribes, for the
most part used for very worthy purposes. These Native Americans
who are employed in many cases have never held employment be-
fore, and I think that the combination of new economic opportuni-
ties plus enhanced education opportunities with the development of
our tribal colleges has been two of the most positive things that we
have seen in a long, long time in my State to break the cycle of
poverty and to break the ongoing dependence of Native Americans
to the Federal Government, to create a greater sense of self-suffi-
ciency and to develop a greater degree of viability, economic viabil-
ity, on the reservations.
Nonetheless, it does require a delicate balance between the
States and the tribes, it does require a very aggressive monitoring
to make sure that organized crime does not become involved here,
that the money — that the revenues are audited properly, that the
management is kept on a high level. So I think this hearing will
be a valuable contribution in our effort to oversee and possibly to
pass legislation relative to Indian gaming.
So I thank you, Mr. Chairman, for holding this hearing on an
issue that is critically important not just to us in the West but real-
ly all across the country.
Mr. Richardson. I thank the gentleman.
I would like to welcome our four distinguished Members of the
House and Senate who will be making their testimony.
As you all know, it is the committee practice that the statement
is fully included in the record.
I would first like to welcome the distinguished chairman of the
Senate Committee on Native American Affairs who has been ag-
gressively pursuing a solution to this issue. He is a champion of
many Native American causes. It is an honor for us to have him
appear with us along with his vice chairman. TTie chair recognizes
the distinguished Senator from Hawaii.
STATEMENT OF HON. DANIEL K. INOUYE, A U.S. SENATOR
FROM THE STATE OF HAWAII, AND CHAIRMAN, SENATE
COMMITTEE ON INDIAN AFFAIRS
Senator Inouye. Thank you very much, Mr. Chairman.
Mr. Chairman and members of the committee. Senator McCain
and I are most grateful to you for your invitation to share our
thoughts with you on a matter pending before your committee.
40
While Senator McCain will present to you an analysis of the his-
tory and conditions that led to the now famous Supreme Court case
in Cabazon, I will try to briefly share with you my thoughts on why
I feel the Government of the United States, of which we are a part,
plays an important role in the furtherance of the general welfare
of native peoples.
Although it seems trite and redundant to say so, it must be re-
peated often enough so that all Americans will always keep in
mind that Indians were here before we came along — ^that this was
their world — ^that in this world they established and maintained
sovereign governments, governments that flourished, governments
that were led by people who were highly sophisticated and most
talented.
We should remind ourselves that in recognition of this reality,
when the Constitution of the United States was drafted, our
Founding Fathers specifically included the native peoples of this
land and set forth the foundation of what we now call trust rela-
tionship, and in subsequent laws and Supreme Court rulings this
trust relationship has been consistently upheld, even during the
dark days of the so-called Indian Wars.
In recognizing this special relationship, our Grovemment, more
importantly, recognized the sovereign nature of the governments of
native people. This fact must be emphasized again and again. In-
dian nations are sovereign nations.
To that end, our predecessors in the Congress during the last
century and the century prior to that entered into negotiations
with these sovereign tribes culminated by the signing of solemn
treaties.
It has been said that the Government of the United States sol-
emnly entered into 800 treaties with the various tribes and nations
of Indian country. Like all treaties, we made promises and Indians
made promises. In each case, we expected and we demanded that
Indians live up to their promises. But I am sad to say that, of the
800 treaties, 430 were ignored by my predecessors in the United
States Senate. The Members of the United States Senate simply re-
fused to act upon them. Of the 370 that were ratified, we, the Unit-
ed States, proceeded to violate provisions in every single one of
them. Now we have before us the matter of Indian gaming.
As the Supreme Court in the Cabazon case and the United
States Constitution and subsequently enacted laws have clearly
recognized, Indian nations are sovereign. It is in this context and
in our desire to uphold the Constitution and honor the intent of our
Founding Fathers that we enacted the Indian Gaming Regulatory
Act of 1988.
However, this law has a fundamental but often unrecognized al-
teration to our national policy of trust relationship. In a real sense,
the relationship, when it concerns the conduct of gaming activities
on Indian lands, should have been between the Federal Govern-
ment and Indian nations.
However, because of the complex variety in the laws of the 50
States, we soon found that it was almost impossible to develop a
Federal law or standard that would apply in a consistent and uni-
form manner in all 50 States. Some States have lotteries, some
have the full array of casino operations, and some, like my home
41
State, have no gaming at all. So with the full understanding of In-
dian nations, we enacted a law that called for compacts to be en-
tered into by two sovereign entities, a State and an Indian nation.
Since July of this year, under the sponsorship of the Senate Com-
mittee on Indian Affairs, representatives of the National Governors
Association, representatives of the National Association of Attor-
neys General, representatives of the Federal Government, and rep-
resentatives of tribal governments have come together to clarify
questions that have arisen as the result of the implementation of
this law.
Many meetings have been held in this city, in the State of Wash-
ington, in New Mexico, in Arizona, and in Colorado. Countless hun-
dreds of hours have been expended on discussions and negotiations,
and, Mr. Chairman, I believe that we are close to resolution.
For example, all parties recognize that gaming has become an
enterprise upon which many State governments across this land in-
creasingly rely so that these governments may provide a full range
of governmental services to their citizens.
What was once strictly a private commercial enterprise is neither
solely private nor commercial any longer. Whether we may like it
or not, in this Nation, govemmentally-sponsored and govem-
mentally-conducted gaming is growing geometrically each year, and
so tribal governments have begun to join their sister State govern-
ments in this enterprise.
In this process of discussion and negotiation, all parties appear
to desire greater certainty in the determination of what games are
permitted to be played under the laws of each State. All parties
recognize that for those States that do not elect to enter into tribal-
State compacts, there must be an alternative process for securing
authority to conduct Class III gaming on Indian lands. All parties
strongly endorse the most stringent regulation of gaming and the
need for comprehensive and cooperative law enforcement. Through
this process of discussion and negotiation, we have found that there
are more interests in common and fewer over which there is a dif-
ference in perspective.
On October 19, we will have a meeting of all the principals, and
I am hopeful that at this meeting we may come forth with some
final resolution of the matter before us. We are working towards
that end, and, if I may, through these means, I would like to thank
all of the parties for their many hours of patient effort and dedica-
tion to this process.
Mr. Chairman, I am aware that most Americans are surprised to
learn that Indians are sovereign. While Indians live on lands that
have been set aside for them and, for the most part, held in trust
by our Government, many of these sovereign Indian nations collect
taxes, they enact ordinances and laws, they have the power and
authority to arrest, to levy fines and impose punishment, they have
the power to regulate the environment, to administer education
and health care programs, they have the power to operate judicial
systems and to enter into the agreements and compacts with other
governments.
Mr. Chairman, in recent months I have spoken before various
groups and councils advocating the right of Indian nations to estab-
lish and conduct gaming operations in those States that do not
42
criminally prohibit such activities. In a sense, I find myself a bit
uncomfortable in this role because throughout my adult life I have
opposed gaming as a means of raising revenue to support govern-
ment activities. As you may know, the State of Hawaii prohibits all
forms of gaming, including bingo.
Mr. Chairman, however, in the case of Indian nations, I support
the tribes in their gaming activities because I believe that we as
a nation have failed in our job of upholding our responsibilities and
obligations.
In the 800 treaties that we have either ignored or violated, we
promised the Indians that in exchange for the hundreds of millions
of acres that they ceded to us we would protect them, assure their
security, and provide for their general welfare, but history shows
that we have failed and failed miserably.
Instead, we participated in massacres, we did not come to their
aid in times of pestilence and starvation, and so today Indian na-
tions that once flourished and numbered in excess of 10 million
people have little more than 2 million in their population. In com-
parison, every ethnic group in the United States has increased in
size over the past 200 years.
But in this great country of ours, the Indian unemployment is
the highest, their health statistics are the worst, their economic
conditions know no equal, and yet, Mr. Chairman, in all of the
wars of this century in which we have participated, Indian people
have, in the spirit of brotherhood, volunteered to serve in every one
of them. In fact, on a per capita basis, there are more veterans in
Indian country than in the rest of this Nation. On a per capita
basis, more IndiEins have given their lives and their limbs in the
service of our country than any other ethnic group.
Mr. Chairman, clearly they have paid their dues. I believe the
time has come for this Nation to reciprocate, and I thank you once
again for this opportunity, and I thank my colleague from Hawaii
for his very generous remarks. Thank you very much, sir.
[Prepared statement of Mr. Inouye follows:]
43
STATEMENT OF SENATOR DANIEL K. INOUYE
CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
BEFORE THE OCTOBER 5, 1993 HEARING
OF THE
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
MR. CHAIRMAN, AND MEMBERS OF THE SUBCOMMITTEE ON NATIVE AMERICAN
AFFAIRS, SENATOR McCAIN AND I ARE MOST GRATEFUL TO YOU FOR YOUR
INVITATION TO SHARE OUR THOUGHTS WITH YOU ON THE MATTER THAT IS BEFORE
YOUR COMMITTEE TODAY -- INDIAN GAMING.
WHILE SENATOR McCAIN WILL PRESENT TO YOU AN ANALYSIS OF THE HISTORY
AND CONDITIONS THAT LED TO THE NOW-FAMOUS SUPREME COURT RULING IN THE
CABAZON CASE, 1 WILL TRY TO BRIEFLY SHARE WFTH YOU MY THOUGHTS ON WHY I
FEEL THE GOVERNMENT OF THE UNITED STATES, OF WHICH WE ARE A PART. PLAYS AN
IMPORTANT ROLE IN THE FURTHERANCE OF THE GENERAL WELFARE OF INDL\N
PEOPLE.
ALTHOUGH IT SEEMS TRITE AND REDUNDANT TO SAY SO, IT MUST BE REPEATED
OFTEN ENOUGH SO THAT ALL AMERICANS WILL ALWAYS KEEP IN MIND THAT INDL\NS
WERE HERE BEFORE THE EUROPEANS -- THAT THIS WAS THEIR WORLD.
THAT IN THIS WORLD THEY ESTABLISHED AND MAINTAINED SOVEREIGN
GOVERNMENTS -- GOVERNMENTS THAT FLOURISHED -- GOVERNMENTS THAT WERE
44
LED BY PEOPLE WHO WERE HIGHLY SOPHISTICATED AND TALENTED.
WE SHOULD REMIND OURSELVES THAT IN RECOGNITION OF THIS REALITY.
WHEN THE CONSTITUTION OF THE UNITED STATES WAS DRAFTED, OUR FOUNDING
FATHERS SPECIFICALLY INCLUDED THE NATIVE PEOPLES OF THIS LAND AND SET
FORTH THE FOUNDATION OF WHAT WE NOW CALL THE TRUST RELATIONSHIP.
AND IN SUBSEQUENT LAWS AND SUPREME COURT RULINGS. THIS TRUST
RELATIONSHIP HAS BEEN CONSISTENTLY UPHELD, EVEN DURING THE DARK DAYS OF
THE SO-CALLED "INDL^iN WARS".
IN RECOGNIZING THIS SPECL«iL RELATIONSHIP. OUR GOVERNMENT -- MORE
IMPORTANTLY -- RECOGNIZED THE SOVEREIGN NATURE OF THE GOVERNMENTS OF
NATIVE PEOPLES. THIS FACT MUST BE EMPHASIZED AGAIN AND AGAIN. INDIAN
NATIONS ARE SOVEREIGN.
TO THAT END, OUR PREDECESSORS IN THE CONGRESS, DURING THE LAST
CENTURY AND THE CENTURY PRIOR TO THAT, ENTERED INTO NEGOTL\TIONS WITH
THESE SOVEREIGN TRIBES -- CULMINATED BY THE SIGNING OF SOLEMN TREATIES.
IT HAS BEEN SAID THAT THE GOVERNMENT OF THE UNITED STATES SOLEMNLY
ENTERED INTO 800 TREATIES WITH THE VARIOUS TRIBES AND NATIONS OF INDIAN
COUNTRY. LIKE ALL TREATIES, WE MADE PROMISES, AND THE INDL^iNS MADE
PROMISES.
IN EACH CASE, WE EXPECTED THE INDIANS TO LIVE UP TO THEIR PROMISES. BUT
45
I AM SAD TO REPORT, THAT OF THE 800 TREATIES, 430 WERE IGNORED BY MY
PREDECESSORS IN THE UNITED STATES SENATE - THE MEMBERS OF THE SENATE
SIMPLY REFUSED TO ACT UPON THEM.
OF THE 370 THAT WERE RATIFIED. WE, THE UNITED STATES, PROCEEDED TO
VIOLATE PROVISIONS IN EVERY SINGLE ONE OF THEM.
NOW WE HAVE THE MATTER OF INDIAN GAMING BEFORE US. AS THE SUPREME
COURT IN THE CABAZON CASE AND THE UNITED STATES CONSTITUTION AND
SUBSEQUENTLY-ENACTED LAWS HAVE CLEARLY RECOGNIZED, INDIAN NATIONS ARE
SOVEREIGN.
IT IS IN THIS CONTEXT AND IN OUR DESIRE TO UPHOLD THE CONSTITUTION AND
HONOR THE INTENT OF OUR FOUNDING FATHERS THAT WE ENACTED THE INDIAN
GAMING REGULATORY ACT OF 1988.
HOWEVER, THIS LAW, HAS A FUNDAMENTAL BUT OFTEN UNRECOGNIZED
ALTERATION TO OUR NATIONAL POLICY OF TRUST RELATIONSHIP.
IN A REAL SENSE, THE RELATIONSHIP -- WHEN IT CONCERNS THE CONDUCT OF
GAMING ACTIVITIES ON INDIAN LANDS -- SHOULD HAVE BEEN BETWEEN THE FEDERAL
GOVERNMENT AND INDIAN NATIONS.
HOWEVER, BECAUSE OF THE COMPLEX VARIETY IN THE LAWS OF THE FIFTY
STATES. WE SOON FOUND THAT IT WAS ALMOST IMPOSSIBLE TO DEVELOP A FEDERAL
LAW OR STANDARD THAT WOULD APPLY IN A CONSISTENT AND UNIFORM MANNER IN
46
ALL HFTY STATES.
SOME STAT1ES HAVE LOTTERIES, SOME HAVE THE FULL ARRAY OF CASINO
OPERATIONS. AND SOME, LIKE MY HOME STATE. HAVE NO GAMING AT ALL.
AND SO, WITH THE FULL UNDERSTANDING OF THE INDIAN NATIONS, WE
ENACTED A LAW THAT CALLED FOR COMPACTS TO BE ENTERED INTO BY THE
SOVEREIGN ENTITIES -- STATES AND INDL^iN NATIONS.
SINCE JULY OF THIS YEAR, UNDER THE SPONSORSHIP OF THE COMMITTEE ON
INDIAN AFFAIRS, REPRESENTATIVES OF THE NATIONAL GOVERNORS ASSOCIATION,
REPRESENTATIVES OF THE NATIONAL ASS0CL\T10N OF ATTORNEYS GENERAL,
REPRESENTATIVES OF THE FEDERAL GOVERNMENT AND REPRESENTATIVES OF TRIBAL
GOVERNMENTS HAVE COME TOGETHER TO CLARimf QUESTIONS THAT HAVE ARISEN
AS A RESULT OF THE IMPLEMENTATION OF THIS LAW.
MEETINGS HAVE BEEN HELD IN WASHINGTON, DC, AND IN WASHINGTON STATE.
AND IN NEW MEXICO.
COUNTLESS HUNDREDS OF HOURS HAVE BEEN EXPENDED ON DISCUSSIONS AND
NEGOTLaiTIONS, AND IT WOULD NOW APPEAR THAT WE ARE CLOSE TO RESOLUTION.
FOR EXAMPLE, ALL PARTIES RECOGNIZE THAT GAMING HAS BECOME AN
ENTERPRISE UPON WHICH MANY STATE GOVERNMENTS ACROSS THIS LAND
INCREASINGLY RELY, SO THAT THESE GOVERNMENTS MAY PROVIDE A FULL RANGE OF
GOVERNMENTAL SERVICES TO THEIR CITIZENS.
47
WHAT WAS ONCE STRICTLY A PRIVATE COMMERCIAL ENTERPRISE IS NEITHER
SOLELY PRIVATE NOR COMMERCIAL ANY LONGER.
AND WHETHER WE MAY LIKE IT OR NOT, IN THIS NATION, GOVERNMENTALLY-
SPONSORED AND GOVERNMENTALLY-CONDUCTED GAMING IS GROWING
GEOMETRICALLY EACH YEAR.
TRIBAL GOVERNMENTS HAVE BEGUN TO JOIN THEIR SISTER STATE
GOVERNMENTS IN THIS ENTERPRISE.
IN THIS PROCESS OF DISCUSSION AND NEGOTL\TION, ALL PARTIES APPEAR TO
DESIRE GREATER CERTAINTY IN THE DETERMINATION OF WHAT GAMES ARE
PERMITTED TO BE PLAYED UNDER THE LAWS OF EACH STATE.
ALL PARTIES RECOGNIZE THAT FOR THOSE STATES THAT DO NOT ELECT TO
ENTER INTO TRIBAL-STATE COMPACTS, THERE MUST BE AN ALTERNATIVE PROCESS
FOR SECURING AUTHORITY TO CONDUCT CLASS III GAMING ON INDL^iN LANDS.
ALL PARTIES STRONGLY ENDORSE THE MOST STRINGENT REGULATION OF
GAMING, AND THE NEED FOR COMPREHENSIVE AND COOPERATIVE LAW
ENFORCEMENT.
THROUGH THIS PROCESS OF DISCUSSION AND NEGOTL\TION, WE HAVE FOUND
THAT THERE ARE MORE INTERESTS IN COMMON. AND FEWER OVER WHICH THERE IS A
DIFFERENCE IN PERSPECTIVE.
48
ON OCTOBER THE 19TH, WE WILL HAVE A MEETING OF ALL OF THE PRINCIPALS
AND I AM HOPEFUL THAT AT THIS MEETING, WE MAY COME FORTH WITH SOME HNAL
RESOLUTION OF THE MATTER BEFORE US AND WE ARE WORKING TOWARDS THAT
END.
AND IF I MAY, THROUGH THESE MEANS, I WOULD LIKE TO THANK AND
CONGRATULATE ALL OF THE PARTIES FOR THEIR MANY HOURS OF PATIENT EFFORT
AND DEDICATION TO THE PROCESS.
I AM AWARE THAT MOST AMERICANS ARE SURPRISED TO LEARN OF INDIAN
SOVEREIGNTY. WHILE INDIANS LIVE ON LANDS THAT HAVE BEEN SET ASIDE FOR
THEM AND FOR THE MOST PART HELD IN TRUST BY OUR GOVERNMENT. MANY OF
THESE SOVEREIGN INDIAN NATIONS COLLECT TAXES, ENACT ORDINANCES, HAVE THE
POWER AND AUTHORITY TO ARREST. TO LEVY FINES AND IMPOSE PUNISHMENT, TO
REGULATE ENVIRONMENTAL QUALITY, TO ADMINISTER EDUCATION AND HEALTH
CARE PROGRAMS, TO OPERATE JUDICIAL SYSTEMS, AND TO ENTER INTO AGREEMENTS
AND COMPACTS WITH OTHER GOVERNMENTS.
MR. CHAIRMAN. IN RECENT MONTHS, I HAVE SPOKEN BEFORE VARIOUS GROUPS
AND COUNCILS ADVOCATING THE RIGHT OF INDIAN NATIONS TO ESTABLISH AND
CONDUCT GAMING OPERATIONS IN THOSE STATES THAT DO NOT CRIMINALLY
PROHIBIT SUCH ACnVITIES.
IN A SENSE, 1 FIND MYSELF A BIT UNCOMFORTABLE IN THIS ROLE BECAUSE
THROUGHOUT MY ADULT LIFE, I HAVE OPPOSED GAMING AS A MEANS OF RAISING
REVENUE TO SUPPORT GOVERNMENTAL ACTIVITIES.
49
AS YOU MAY KNOW, THE STATE OF HAWAII PROHIBITS ALL FORMS OF GAMING,
INCLUDING BINGO.
HOWEVER, IN THE CASE OF THE INDIAN NATIONS, I SUPPORT THE TRIBES IN ALL
OF THEIR ACnVITIES, BECAUSE I BELIEVE THAT WE AS A NATION HAVE FAILED IN OUR
JOB OF UPHOLDING OUR RESPONSIBILITIES.
IN THE 800 TREATIES THAT WE HAVE EITHER IGNORED OR VIOLATED, WE
PROMISED THE INDL\NS THAT IN EXCHANGE FOR THE HUNDREDS OF MILLIONS OF
ACRES THAT THEY CEDED TO US, WE WOULD PROTECT THEM, ASSURE THEIR SECURITY
AND PROVIDE FOR THEIR GENERAL WELFARE.
BUT HISTORY SHOWS THAT WE HAVE FAILED MISERABLY. INSTEAD, WE
PARTICIPATED IN MASSACRES. WE DID NOT COME TO THEIR AID IN TIMES OF
PESTILENCE AND STARVATION. AND SO TODAY, INDIAN NATIONS THAT ONCE
NUMBERED IN EXCESS OF 10 MILLION PEOPLE HAVE LITTLE MORE THAN 2 MILLION IN
THEIR POPULATION.
IN COMPARISON, EVERY ETHNIC GROUP IN THE UNITED STATES HAS INCREASED
IN SIZE OVER THE PAST 200 YEARS. BUT IN THIS GREAT COUNTRY OF OURS, THE
INDIAN UNEMPLOYMENT IS THE HIGHEST, THEIR HEALTH STATISTICS ARE THE WORST,
THEIR ECONOMIC CONDITIONS KNOW NO EQUAL.
AND YET, MR. CHAIRMAN, IN ALL OF THE WARS OF THIS CENTURY, THE INDIAN
PEOPLE HAVE, IN THE SPIRIT OF BROTHERHOOD, HELPED US IN EVERY WAR.
50
ON A PER CAPITA BASIS THERE ARE MORE VETERANS IN INDIAN COUNTRY THAN
IN THE REST OF THE NATION. ON A PER CAPITA BASIS. MORE INDIANS HAVE GIVEN UP
THEIR LIVES AND THEIR LIMBS THAN ANY OTHER ETHNIC GROUP.
MR. CHAIRMAN. THEY HAVE PAID THEIR DUES. I BELIEVE THE TIME HAS COME
FOR THIS NATION TO RECIPROCATE.
51
Mr. Richardson. Thank you, Senator Inouye.
The chair recognizes the distinguished vice chairman, my col-
league and neighbor from Arizona, John McCain.
STATEMENT OF HON. JOHN McCAIN, A U.S. SENATOR FROM
THE STATE OF ARIZONA, AND VICE CHAIRMAN, SENATE
COMMITTEE ON INDIAN AFFAIRS
Senator McCain. Thank you, Mr. Chairman, and I want to thank
you for holding this hearing. I also want to express my appreciation
for your and Congressman Thomas's stewardship of a much needed
Subcommittee on Indian Affairs. We appreciate the working rela-
tionship that we have, and I am optimistic about our ability to con-
tinue to work on behalf of Native Americans not only on this issue
but many others, and I am grateful for the many-year commitment,
Mr. Chairman, you have had to Native Americans both in your
State and mine.
Mr. Chairman, I want to just discuss the Act with you for a
minute and then talk about one of the major issues of this hearing,
and that is the issue of organized crime and its involvement in In-
dian gaming.
As you Imow, Mr. Chairman, the Cabazon decision held that if
a State civilly regulates any form of gaming, then the tribes in that
State can engage in that activity free of State regulation. Remem-
ber that all of this began with the Cabazon decision. The Cabazon
decision also held that if a State law criminally prohibits a form
of gambling, then the tribes within that State cannot engage in
that activity.
Let's make it clear, Mr. Chairman. If a State wants to criminally
prohibit gaming in their State, then the Indians cannot engage in
gaming in that State, and that is something, I think, that is ne-
glected quite a bit.
Under the Act, as you know, it says that the States can deter-
mine what gaming activity is permitted, and at the insistence of
the States in the non-Indian gaming industry, the Act further re-
stricted tribal rights by requiring a tribal-State compact for most
forms of gaming, except bingo and pull tabs.
Mr. Chairman, let the record show that the Act has worked well
in those States where the parties wanted it to work. There are now
76 compacts in 12 States in this country, 12 in my own State of
Arizona, and where the State and Indian interests have come to-
gether and sat down and negotiated in honest good faith, there
have been successful compacts agreed to.
Let me also mention, Mr. Chairman, what you said at the begin-
ning of the hearing. Accidental deaths, the death rate of Indians
is 295 percent greater than U.S. rates; the suicide rate among Indi-
ans is 95 percent greater; high school dropout, 35 percent greater;
unemployment; and on and on. The statistics are appalling and
egregious and outrageous, and you and I and Senator Inouye, and
every member of this committee has worked for years on the an-
swer, and the answer is economic development, and we have failed,
and all you have to do is visit a reservation in your State or mine,
and we know that we have failed.
What has provided funds for these much needed programs? Not
the Federal Grovemment but Indian gaming. I don't like Indian
52
gaming, you don't like Indian gaming, others may not like Indian
gaming. The fact is, Indian gaming has provided much needed rev-
enues to provide these people with an opportunity which we owe
all of our citizens.
I just want to finally, Mr, Chairman, talk about one issue, the
possibility or likelihood of organized crime infiltration into Indian
gaming. Senator Inouye's leadership led us to a hearing on March
18, 1992. One of the witnesses was Mr. Paul Maloney, senior coun-
sel for policy of the Criminsd Division of the Justice Department.
Mr. Chairman, I ask unanimous consent that his entire statement
be made part of the record.
Mr. Richardson. Without objection.
[Prepared statement of Mr. Maloney follows:]
53
g^parlmntt of |ustue
STATEMENT
OF
PAUL L. MALONEY
SENIOR COUNSEL FOR POLICY
CRIMINAL DIVISION
BEFORE
THE
SELECT COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
CONCERNING
INDIAN GAMING REGULATORY ACT
ON
MARCH 18, 1992
54
Mr. Chairman and Members of the Cosunittee —
My name is Paul L. Maloney, and I am Senior Counsel for Policy
in the Department of Justice Criminal Division. With ne once again
is the Honorable Linda A. Akers, United States Attorney for the
District of Arizona and Chair of the Indian Affairs Subcommittee of
the Attorney General's Advisory Committee of United States
Attorneys. Also accompanying me is Jim E. Moody, Chief of the
Organized Crime Section of the Federal Bureau of Investigation.
As I stated in my testimony on February 5th, the Department of
Justice is dedicated to respond promptly to serious and flagrant
non-compliance with Indian gaming laws. The Department of Justice
will utilize its enforcement weapons against operations conducted
without tribal sanctions or where there is evidence of organized
crime infiltration, skimming or other forms of crime. For example,
several prosecutions were brought against private entrepreneurs
operating casinos in violation of tribal, state and federal laws on
the St. Regis Mohawk reservation in the Northern District of New
York; casinos operated without tribal authority were closed down in
the District of Montana and the Eastern District of Oklahoma; a
casino operation in the Northern District of California was closed
down when reports of skimming by the manager, allegedly an
associate of organized crime figures, was investigated; and, in the
Southern District of California, an Indian official was convicted
of embezzlement, and his wife of income tax violations, arising out
of his skimming from the tribal gaming establishment he managed.
55
2
But I wish to reiterate and emphasize what I stated earlier:
The perception in the media and elsewhere that Indian gaming
operations are rife with serious criminality does not stand up
under close examination. Under analysis, the contention breaks
down into three assertions - that the tribal games have been
infiltrated by organized crime families; that, they have been
victimized by criminal elements not associated with the major crime
families; or that the tribes are conducting illegal gaming.
Insofar as organized crime is concerned, the Department of
Justice believes that to date there has not been a widespread or
successful effort by organized crime to infiltrate Indian gaming
operations. For several years the FBI has focussed its efforts on
monitoring those organizations and their associates to apprehend
them as they engage in illegal activity or attempt to infiltrate
legitimate enterprises. This kind of investigation revealed the
attempt - which did not succeed - to infiltrate the gaming
operation of the Rincon Band in California that I informed you last
time resulted in the indictment of ten men on charges of
racketeering, extortion, mail fraud and wire fraud. The FBI,
moreover, informs me that there are at present fewer than five open
investigations of organized crime family activity relating to
gaming on Indian lands. As monitoring those families is one of the
FBI's highest priorities, I am confident that should evidence of
federal crime develop it will be fully investigated and referred to
the United States Attorneys for appropriate action.
56
3
Furthermore, there has also been little evidence of criminal
activity committed by criminal elements not associated with the
major organized crime families. Again, on those occasions when
such allegations have been brought to our attention, they have been
investigated, and when sufficient evidence is developed for
conviction, we have not hesitated to prosecute. One such case is
that of the Indian official who skimmed the receipts of his tribe's
bingo hall. I am informed that there are a handful of
investigations into allegations of similar misconduct now being
conducted.
Finally, we come to the assertion of "illegal gaming." This
label also covers different kinds of regulatory violations. One
set is gaming that is not operated under tribal auspices, and
therefore cannot be legal under any circximstances. To my
knowledge, all such operations have been shut down. They include
the St. Regis casinos and those on Crow and Choctaw lands.
The other set of allegedly illegal gaming is gaming under
tribal auspices. It would appear that all of the games so
identified are instances in which the characterization of the
gaming as illegal means gaming believed to fall in class III under
the Indian Gaming Regulatory Act (IGRA) that is being conducted
without the benefit of a compact negotiated with the state. In
some cases the classification is in dispute, with the tribes
claiming it properly falls in class II, Until the National Indian
57
4
Gaming Commission (NIGC) issues its final definition regulations
later this year, it cannot be said with positive assurance that
such gaming is not class II. In other instances of admitted class
III gaming, the state and tribes are in the course of negotiation
that will result in compacts allowing or disallowing the games. In
still other cases the state has declined to include certain games
within the compact and the tribe is expected to discontinue the
games or file suit under the IGRA, if it has not already done so.
In still other cases suits have been filed because the whole
negotiation process has reached an impasse. Thus, at the moment,
as I previously testified, the illegality of the challenged games
is in doubt or in dispute. In these instances, the United States
Attorneys are faced with the difficult decision to allocate scarce
investigative and prosecutorial resources against these alleged
tribal regulatory violations when there are so few that could not
colorably be legitimated under the IGRA through Commission, state
or judicial action, and are in the process of resolution.
This can best be demonstrated by a review of the map that
Senator DeConcini asked me to investigate at the previous hearing.
That map, incidentally, was prepared by the Department of the
Interior (DOI) from anecdotal material supplied by its field staff.
The map is an outline map of the lower 48 states. Within the
outlines of nine states are a total of 41 orange dots which the key
identifies as signifying "illegal gaming." The characterization of
gaming as illegal represents informal information which may or may
58
5
not prove correct (e.g., that the gaming is class III) or upon a
fact situation that is in flux (e.g., no compact is in existence).
We have examined the status of the gaming activity represented by
each of the orange dots and in most instances the tribes are either
in the process of negotiation with the state or the tribes have
filed suit against the state contending that the state has not
negotiated in good faith. In other instances, where those
conditions are not present, the operations have been closed down by
federal and local law enforcement.
In sum, the informal survey of the Department of the Interior,
when properly evaluated, does not support a perception that there
is widespread serious criminal activity involving gaming on Indian
reservations. What you have is gaming of questionable legality in
the process of moving toward compliance with the IGRA. If the
tribes and states continue in good faith under the soon to be
published regulations of the NIGC, these regulatory violations,
both real and apparent, will cease to exist.
The Department of Justice does not withdraw its repeated
warnings that the flow of currency through Indian casinos requires
continuing vigilance to avert illegal activities such as
embezzlement, fraud and money laundering and to protect the tribes'
interests. This is true of non-Indian gaming as well. Strict
compliance with the scheme of regulation ordained by Congress is of
59
6
Utmost importance to insure the benefits of lawful gaming by the
Indian tribes.
•Mr. Chairman, this concludes my statement and I, along with
Ms. Akers and Mr. Moody, would be glad to answer any questions from
you and members of the Committee.
60
Senator McCain. On page 2 — this is the statement by Mr.
Maloney — "But I wish to reiterate and emphasize what I stated
earUer. The perception in the media and elsewhere that Indian
gaming operations are rife with serious criminaUty does not stand
up under close examination. Insofar as organized crime is con-
cerned, the Department of Justice believes that to date there has
not been a widespread or successful effort by organized crime to in-
filtrate Indian gaming operations. For several years, the FBI has
focused its efforts on monitoring those organizations and their asso-
ciates to apprehend them as they engage in illegal activity or at-
tempt to infiltrate legitimate enterprises. This kind of investigation
revesded the attempt which did not succeed to infiltrate the gaming
operation of the Rincon Band in California. I am confident that
should evidence of Federal crime develop, it will be fully inves-
tigated and referred to the United States attorneys for appropriate
action."
We also have the commitment from the Justice Department, Mr.
Chairman, to bring to our attention any serious evidence that
might indicate organized crime infiltrating.
Mr. Chairman, I want to say something we all know, wherever
there is gambling, there is the possibility of infiltration of criminal
elements, there is just too much temptation there, but to come be-
fore this committee and allege that organized crime is infiltrating
the Indian gaming in this country does not stand up with the testi-
mony of the Department of Justice whom I would rely upon.
Finally, Mr. Chairman, perhaps the most revered man that you
and I have had the privilege of serving with was Morris Udall. In
July of 1988, Morris Udall said the following: "Mr. Speaker, the In-
dian tribes, using treaties we forced upon them, laws which were
passed without their consent, and our own courts, sued to vindicate
their right to self-government so jealously guarded by them and so
solemnly promised by us. They went to our courts to fight for their
right to engage in gaming activities without hindrance by State
governments, and they won. In the economic wasteland of the res-
ervations that we have fostered, some of the tribes have found a
small ray of hope for economic betterment, a chance for better
health, better education, better jobs, a better future, but we can't
permit that. Powerful economic forces have mobilized to ensure
that it does not happen. And what is the justification given for once
again breaking our word to the Indians? The opponents of Indian
gaming activities raise the specter of organized crime. In 15 years
of commercial gaming activity on Indian reservations, there has not
been one clearly proven case of organized crime infiltrating gaming
activity. Yes, there has been whispered rumors of such activities,
and yes, there is potential, and I do share that concern."
Finally, Mr. Chairman, let me quote from Mr. Udall in conclu-
sion. In July 1988, Congressman Mo Udall said,
I must oppose legislation damaging to Indian self-government and Indian rights.
It may be that an intransigent non-Indian gaming industry has the economic power
and poUtical muscle to shove State rule over Indian governments down the throat
of the tribes or to simply destroy the right by a Federal ban, but it will be done
without my consent and without my support.
61
Mr. Chairman, it will be done without my consent and without
my support. I thank you, Mr. Chairman.
[Prepared statement of Mr. McCain follows:]
62
STATEMENT
OF
SENATOR JOHN M 'AIN
BEFORE THE
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
OF THE
COMMITTEE ON NATURAL RESOURCES
OVERSIGHT HEARING ON THE INDIAN GAMING REGULATORY ACT
OCTOBER 5, 1993
Mr. Chairman and Members of the Subcommittee, I am pleased
to be here with you today and I thank you for providing this
opportunity to appear before you. I also want to associate
myself with the remarks made by my good friend, Senator Inouye.
During the 102nd Congress the Senate Committee on Indian
Affairs held three oversight hearings to determine how the Indian
Gaming Regulatory Act was being implemented. We have spent much
of this year engaged in a process aimed at reaching a consensus
between state, federal and tribal government officials on any
amendments to the Act which may be necessary to improve its
implementation. This process has already yielded genuine
progress and we remain hopeful that it will soon result in an
agreement on amendments to the Act.
Based on our experience since the Act was enacted in 1988, I
think that a few general conclusions can be reached with regard
to the effectiveness of the Act. First, it is clear that the Act
has worked well in every state where the parties have made the
effort to work cooperatively. On the other hand, where the
states have refused to negotiate, the Act has not always worked
well and litigation and bitterness have replaced cooperation and
successful negotiations. Overall, the Act has now resulted in 76
compacts in twelve states to govern the operation of Class III
gaming. In my own State of Arizona, implementation of the Act
has been difficult and contentious. This year, after several
years of failed efforts to enter into compacts, the state and
twelve tribes have now reached final agreements and more
agreements are likely in the coming months.
Since 1988, Indian gaming has grown from gross revenues of
about $1 billion to $6 billion in 1992. Nationwide Indian gaming
constitutes about 3% of all gaming activity. Net revenues from
Indian gaming in 1992 were estimated at $750 million and were
primarily used to provide tribal members with education, health
care, employment and the infrastructure necessary for economic
growth and development.
The second conclusion which can be reached is that the fears
which have been raised over the years about the infiltration of
Indian gaming by organized crime are false and unfounded. The
63
Senior Counsel for Policy of the Criminal Division of the
Department of Justice testified before the Senate Committee on
Indian Affairs on March 18, 1992 and stated:
Insofar as organized crime is concerned, the Department of
Justice believes that to date there has not been a
widespread or successful effort by organized crime to
infiltrate Indian gaming operations. . . . Furthermore,
there has been little evidence of criminal activity
committed by criminal elements not associated with the major
organized crime families.
The simple fact of the matter is that there has been very little
criminal activity associated with Indian gaming. In large part
the reason for this has been the vigilance of the tribal
governments. They know as well or better than any of us that any
criminal activity will ruin their chances to make gaming the
viable economic activity which it has shown it can be on so many
Indian reservations.
Mr. Chairman, I believe that it would serve the Subcommittee
and the entire Congress well to remember the words of our
colleague, the distinguished former Chairman of the Committee on
Interior and Insular Affairs, Morris Udall. On July 6, 1988, a
few short months before the Indian Gaming Regulatory Act was
enacted. Chairman Udall addressed the House on the issue of
Indian gaming generally and the fear of organized crime in
particular:
Mr. Speaker, the Indian tribes, using treaties we forced
upon them, laws which were passed without their consent, and
our own courts, sued to vindicate their right to self-
government, so jealously guarded by them and so solemnly
promised by us. They went to our courts to fight for their
right to engage in gaming activities without hindrance by
State governments. And they won.
In the economic wasteland of the reservations that we have
fostered, some of the tribes have found a small ray of hope
for economic betterment. A chance for better health, better
education, better jobs, a better future. But we can't
permit that. Powerful economic forces have mobilized to
ensure that it does not happen.
The most effective way to prevent it is to take away their
right to self-government to make that choice for themselves
and to subject them to the laws and the jurisdiction of the
States. And that is what we are asked to do — to destroy
that tribal right of self-government by unilaterally
imposing upon them State rule.
And what is the justification given for once again breaking
our word to the Indians? The opponents of Indian gaming
activities raise the specter of organized crime. In 15
64
years of commercial gaming activity on Indian reservations,
there has not been one clearly proven case of organized
crime infiltrating Indian gaming. Yes there has been
whispered rumors of such activity. And yes, there is a
potential and I too share that concern.
However the opponents of Indian gaming, with little
evidence, assert that the infiltration of organized crime is
a clear and present danger and the only remedy is State
jurisdiction. They say the Tribes and Federal government
cannot handle organized crime; only the states can. They
would have us believe that the FBI, the Justice Department
and other federal law enforcement agencies cannot do what
the states can.
Mr. Chairman, here we are five years after enactment of the
Indian Gaming Regulatory Act and we find the opponents of Indian
gaming making the exact same arguments which Chairman Udall noted
in July of 1988. Even a casual reading of some of the bills
which have recently been introduced to amend the Act demonstrates
this fact. For example, the proponents of H.R. 2287, the Gaming
Regulatory and State Law Enforcement Act of 1993 claim that there
is a law enforcement crisis in Indian gaming which can only be
rectified by placing Indian gaming totally under state control
and greatly limiting Indian gaming activity. There is no law
enforcement crisis. Legislation of this type is intended to
destroy Indian gaming. Nothing more and nothing less.
To this extent, little has changed in the five years since
the Act became law. On August 3, 1988 the Senate Committee on
Indian Affairs filed its report on S.555, the bill which became
the Indian Gaming Regulatory Act. In my Additional Views which
accompanied the report, I noted that:
As the debate unfolded, it became clear that the
interests of the states and of the gaming industry
extended far beyond their expressed concern about
organized crime. Their true interest was protection of
their own games from a new source of economic
competition.... the States and the gaming industry have
always come to the table with the position that what is
theirs is theirs and what the Tribes have is
negotiable.
The States and the non-Indian gaming industry prevailed in many
ways in the Indian Gaming regulatory Act. The Act embodies a
significant infringement on tribal rights of self -governance. As
the members of the Subcommittee know, the Act is premised on the
Supreme Court's decision in the Cabazon case. The Court found
that if state law criminally prohibits a form of gambling, then
the tribes within that state may not engage in that activity. If
on the other hand, state law civilly regulates a form of gaming,
then the tribes in that state can engage in that activity free
65
from state control. The Act takes the Cabazon restriction a step
further with its requirement that Class III gaming can only be
conducted pursuant to an approved tribal/state compact. This
provision was included in the Act over the objections of most
tribes and at the insistence of the states and the non-Indian
commercial gaming industry.
The States, not the Tribal or Federal governments,
determine what gaming activity, if any, will ultimately be
permitted. Despite this fact, it is apparent that some states
and some non-Indian gaming operators are once again anxious to
destroy Indian gaming to eliminate it as a competitive force.
If I may, I would like to once again refer to the remarks of
Chairman Udall in July of 1988:
... I must oppose legislation damaging to Indian self-
government and Indian rights. It may be that an
intransigent non-Indian gaming industry has the economic
power and political muscle to shove State rule over Indian
governments down the throat of the tribes or to simply
destroy the right by a federal ban. But it will be done
without my consent and without my support.
66
Mr. Richardson. I thank the gentleman.
The chair recognizes a leader in this House on many issues on
law enforcement and crime, and we are pleased that the gentleman
from New Jersey, the Honorable Bill Hughes from the Second Dis-
trict, is here.
Please proceed. Bill.
STATEMENT OF HON. WILLIAM J. HUGHES, A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Hughes. Thank you very much, Mr. Chairman. Good morn-
ing, and thank you very much for inviting me to testify here today
before this most distinguished subcommittee.
At the outset, I would like to extend my thanks to you, Chairman
Richardson, Chairman George Miller, and other members of this
panel for the courtesies you have extended to me these past several
months in our discussions about the Indian Gaming Act.
I am really very pleased that you understand both the problems
which exist with the current Indian Gaming Regulatory Act and
the need to make some reforms, particularly in the regulatory as-
pects of the law. I look forward to continuing our dialogue and to
working with you to develop remedies which are in the public in-
terest and are fair and reasonable to all parties involved.
As the committee knows, it has been six years since Congress
voted to sanction gambling operations on Indian reservations.
While I believe the intent of the law was to balance both the State
interests, including effective enforcement, and Indian sovereignty
concern, I feel the Act has fallen short in many respects.
At the time of enactment, I did not believe that the Act would
guarantee that a carefully constructed and effective regulatory
framework would be put in place to keep the gaming activities
clean and consistent with State laws, regulations, and economic
and other interests. I also believed that the compact negotiation
process for Class 3 gaming was essentially unworkable and would
merely spawn conflict and litigation. Unfortunately, many of my
concerns are now realized.
What started out as an effort to recognize the right of Indian
tribes to conduct carefully regulated forms of legalized gambling
has since led to the proliferation of high-stakes gaming activities
among some 71 tribes in 18 different States without the safeguards
that would balance all State interests that we have a right to ex-
pect.
I am concerned that many of these gaming operations are not
subject to adequate licensing, supervisory, or enforcement mecha-
nisms which are capable of dealing with high-staking gambling and
the many problems associated with it. This, in turn, has raised se-
rious concerns that the gaming operations are vulnerable to corrup-
tion and infiltration of organized crime. Just as importantly, it has
raised the ire of many local citizens who fear that gaming oper-
ations are being forced into their communities without their con-
sent.
The ambiguity of the law has spawned a proliferation of lawsuits,
as I mentioned, between Indian tribes and the States rather than
encouraging the type of good-faith negotiations which were the in-
tent of the 1988 Act.
67
While there is some consensus on the problems that the Indian
Gaming Act has created, there is little agreement on the solutions.
Indeed, there is no consensus even within the gaming industry in
my own area, Atlantic City, which is located in the district that I
have the privilege to represent.
For that reason, I have asked the New Jersey Casino Associa-
tion, which has tremendous experience and expertise, to put to-
gether a working group and to advise me on this most important
and highly complex issue. Hopefully, this working group can also
complement the ongoing efforts of the States and Indian tribes to
resolve their differences, and I salute the Senator, Senator Inouye,
and Senator McCain, and others who are working with the gov-
ernors and other interests to try to bring some resolution to this
very, very difficult and complex issue, or series of issues.
Task forces have been established by the National Governors As-
sociation, the Association of Attorneys General, and that is what
has been involved in the ongoing negotiations, and I am happy that
we have a meeting, I think scheduled for October 19, that may see
a resolution of these very difficult issues. I applaud those efforts
and hope they will lead to a fair, reasonable, and balances resolu-
tion of the concerns which many of us have raised.
From my own perspective, I believe that any legislation to amend
the Indian Gaming Act must embody one basic principle. That is,
it must protect the integrity of any gaming operation by assuring
this it adequately regulates and enforces and ensures that it does
not put other State-regulated interests at a competitive disadvan-
tage. The latter concern was specifically recognized by the 1988 Act
as a legitimate and important factor to be considered.
For instance, in my own State of New Jersey, we have tens of
thousands of jobs involved, and billions and billions of dollars in
which our State has a vital interest. It is my belief that States and
their citizens have the right to insist that any gaming operation
within their borders receive the same level of regulatory scrutiny
that they impose on their own licensees and play by the same rules
mandated by the State for non-Native American interests in that
State.
The reason for this is not so much a sense of fairness to the li-
censees but that the States clearly have a protectable interest in
the integrity of all gaming as well as the socioeconomic well-being
of all of its citizens.
Moreover, if gaming operations are allowed to take place on an
Indian reservation at a lower level of scrutiny than that which is
accorded other gaming operations in the State, that threatens to
undermine the public's confidence that gaming can be effectively
run and supervised.
As long as States are going to be required to agree to a compact,
as the Indian Gaming Regulatory Act now provides, then I believe
the Indian gaming operations must either subject themselves to the
jurisdiction of their States' regulatory system or be required to es-
tablish a regulatory system of their own which is comparable to the
States' in every respect. Indeed, I believe that was the clear intent
of the 1988 Act.
Unfortunately, the Act has not worked as well as was intended.
I believe the New Jersey Casino Control Act offers a model to not
68
only regulate the gaming industry but also to assure the public's
confidence in the integrity and credibility of the entire industry.
In fact, I read with great interest this morning after I received
Jim Moody's testimony, that he makes the same suggestion. He is
the section chief, as you know, of the Organized Crime Drug Oper-
ations Criminal Investigative Division of the Federal Bureau of In-
vestigation. I believe that that Act in New Jersey is well reasoned,
it has been tested, and has proven to be effective.
In New Jersey, enforcement of the Casino Control Act is divided
among two agencies, the Casino Control Commission, which is in
charge of licensing and regulatory affairs, and the Division of Gam-
ing Enforcement, which is the investigative and prosecutorial agen-
cy. At the present time, the combined staffs of these two agencies
is in excess of 850 personnel. Their combined budgets are approxi-
mately $56 million, every penny of which is paid out of fees and
assessments against the casino industry and its licensees.
Some of what the Casino Control Commission does is obvious;
they license the companies and the people who work for the compa-
nies which run the casinos; they also supervise and set the rules
for the games; and they are very much involved in supervising the
passage of money and the control of credit. Those are the core mis-
sions of the CCC.
But there is more to the regulatory system in New Jersey than
just that. The State also licenses and regulates any business that
does business with the casinos on a regular basis. This includes ca-
sino-related operations such as those which sell cards or dice to the
casinos as well as non-gaming businesses including those which
sell liquor, food, furniture, and so forth. The State investigates
each of these companies as well as their principal officers.
In addition, any company which is involved in loaning money to
a casino to build or finance the construction of a casino, hotel, or
expand it, must be licensed to do so. As a result, the law blankets
the casinos themselves, all companies which do business with them
on a regular basis, and all the financial sources of the casino com-
panies.
I point this out because I believe it addresses the three central
issues in this debate: Where will the regulation of Indian gaming
activities take place? How will it be paid for? And what form will
it take? Once again, I believe the New Jersey experience provides
an excellent model for addressing each of these concerns.
Certainly there are other side issues to be addressed as well. For
example, serious questions have been raised about the efforts by
some tribes to expand their enclaves to lands which are not a part
of their recognized reservations. I find that particularly troubling.
At the present time, the Indian Gaming Regulatory Act is not
providing an adequate level of protection, with some notable excep-
tions, I might say. Indeed, it contains loopholes and ambiguities
which cripple its effectiveness. If we don't act to soon correct the
deficiencies in the law, it is only a matter of time before the
public's confidence in the integrity and acceptance of systems of le-
galized gaming will be destroyed. If that happens, the implications
of such a catastrophe will go well beyond the damage to any indi-
vidual casino or Indian tribe or State. It will undermine the public
69
confidence in our ability to keep organized crime and other ele-
ments out of this industry.
Mr. Chairman, those are my overall concerns. I look forward to
working with you to develop a framework which will enable us to
address these serious concerns. I thank you again and look forward
to that kind of cooperative effort that I have seen in the last few
months.
Mr. Richardson. I thank the gentleman.
[Prepared statement of Mr. Hughes follows:]
70
TESTIMONY BY THE HONORABLE WILLIAM J. HUGHES, M.C.
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS, OCT. 5, 1993
THANK YOU VERY MUCH, MR. CHAIRMAN. I AM WILLIAM J. HUGHES,
MEMBER OF CONGRESS, REPRESENTING NEW JERSEY'S SECOND
CONGRESSIONAL DISTRICT. I APPRECIATE THE OPPORTUNITY TO TESTIFY
BEFORE THIS DISTINGUISHED SUBCOMMITTEE TODAY, TO SHARE WITH YOU
SOME OF MY THOUGHTS AND CONCERNS ABOUT INDIAN GAMING.
AT THE OUTSET, I WANT TO EXTEND MY THANKS TO YOU, CHAIRMAN
RICHARDSON, AS WELL AS FULL COMMITTEE CHAIRMAN GEORGE MILLER AND
OTHER MEMBERS OF THIS PANEL, FOR THE COURTESIES YOU HAVE EXTENDED
TO ME THESE PAST MONTHS IN OUR DISCUSSIONS ABOUT THE INDIAN
GAMING ACT.
I AM VERY PLEASED THAT YOU UNDERSTAND BOTH THE PROBLEMS
WHICH EXIST WITH THE CURRENT INDIAN GAMING REGULATORY ACT, AND
THE NEED TO MAKE SOME REFORMS, PARTICULARLY IN THE REGULATORY
ASPECTS OF THE LAW. I LOOK FORWARD TO CONTINUING OUR DIALOGUE,
AND TO WORKING WITH YOU TO DEVELOP REMEDIES WHICH ARE IN THE
PUBLIC INTEREST AND ARE FAIR TO ALL PARTIES INVOLVED.
AS THE COMMITTEE KNOWS, IT HAS BEEN SIX YEARS SINCE CONGRESS
VOTED TO SANCTION GAMBLING OPERATIONS ON INDIAN RESERVATIONS.
WHILE I BELIEVE THE INTENT OF THAT LAW WAS TO BALANCE BOTH THE
STATE INTERESTS, INCLUDING EFFECTIVE ENFORCEMENT, AND INDIAN
SOVEREIGNTY CONCERNS, I FEEL THE ACT FELL SHORT OF THAT GOAL.
71
-2-
AT THE TIME OF ENACTMENT, I DID NOT BELIEVE THAT THE ACT
WOULD GUARANTEE THAT A CAREFULLY CONSTRUCTED AND EFFECTIVE
REGULATORY FRAMEWORK WOULD BE PUT IN PLACE, TO KEEP THE GAMING
ACTIVITIES CLEAN AND CONSISTENT WITH STATE LAWS, REGULATIONS AND
ECONOMIC AND OTHER INTERESTS.
I ALSO BELIEVED THAT THE COMPACT NEGOTIATION PROCESS FOR
CLASS III GAMING WAS ESSENTIALLY UNWORKABLE, AND WOULD MERELY
SPAWN CONFLICT AND LITIGATION. UNFORTUNATELY, MANY OF MY
CONCERNS ARE NOW BEING REALIZED.
WHAT STARTED OUT AS AN EFFORT TO RECOGNIZE THE RIGHT OF
INDIAN TRIBES TO CONDUCT CAREFULLY REGULATED FORMS OF LEGALIZED
GAMBLING, HAS SINCE LED TO A PROLIFERATION OF HIGH-STAKES GAMING
ACTIVITIES AMONG SOME 71 TRIBES IN 18 DIFFERENT STATES, WITHOUT
THE SAFEGUARDS THAT WOULD BALANCE ALL STATE INTERESTS THAT WE
HAVE A RIGHT TO EXPECT.
I AM CONCERNED THAT MANY OF THESE GAMING OPERATIONS ARE NOT
SUBJECT TO ADEQUATE LICENSING, SUPERVISORY OR ENFORCEMENT
MECHANISMS, WHICH ARE CAPABLE OF DEALING WITH HIGH-STAKES
GAMBLING AND THE MANY PROBLEMS ASSOCIATED WITH IT. THIS, IN
TURN, HAS RAISED SERIOUS CONCERNS THAT THE GAMING OPERATIONS ARE
VULNERABLE TO CORRUPTION AND INFILTRATION BY ORGANIZED CRIME.
JUST AS IMPORTANTLY, IT HAS RAISED THE IRE OF MANY LOCAL
CITIZENS, WHO FEAR THAT GAMBLING ACTIVITIES ARE BEING FORCED INTO
THEIR COMMUNITIES WITHOUT THEIR CONSENT. THE AMBIGUITY OF THE
LAW HAS ALSO SPAWNED A PROLIFERATION OF LAWSUITS BETWEEN INDIAN
TRIBES AND THE STATES, RATHER THAN ENCOURAGING THE TYPE OF GOOD-
FAITH NEGOTIATIONS WHICH WERE THE INTENT OF THE 1988 ACT.
72
-3-
WHILE THERE IS SOME CONSENSUS ON THE PROBLEMS WHICH THE
INDIAN GAMING ACT HAS CREATED, THERE IS LITTLE AGREEMENT ON THE
SOLUTIONS. INDEED, THERE IS NO CONSENSUS EVEN WITHIN THE GAMING
INDUSTRY IN ATLANTIC CITY, WHICH IS LOCATED IN THE DISTRICT THAT
I HAVE THE PRIVILEGE TO REPRESENT.
FOR THAT REASON, I HAVE ASKED THE NEW JERSEY CASINO
ASSOCIATION--WHICH HAS TREMENDOUS EXPERIENCE AND EXPERTISE--TO
PUT TOGETHER A WORKING GROUP TO AND ADVISE ME ON THIS MOST
IMPORTANT AND HIGHLY COMPLEX ISSUES.
HOPEFULLY, THIS WORKING GROUP CAN ALSO COMPLEMENT THE
ONGOING EFFORTS OF THE STATES AND INDIAN TRIBES TO RESOLVE THEIR
DIFFERENCES.
TASK FORCES HAVE ALSO BEEN ESTABLISHED BY THE NATIONAL
ASSOCIATION OF ATTORNEYS GENERAL AND THE NATIONAL GOVERNORS
ASSOCIATION. THESE TASK FORCES AND REPRESENTATIVES OF INDIAN
TRIBES HAVE BEEN MEETING TO STUDY AND MAKE RECOMMENDATIONS TO THE
CONGRESS, ON HOW TO IMPROVE THE STATUTORY FRAMEWORK FOR THE
REGULATION OF GAMBLING ON INDIAN LANDS.
I APPLAUD THESE EFFORTS AND HOPE THEY WILL LEAD TO A FAIR,
REASONABLE AND BALANCED RESOLUTION OF THESE CONCERNS WHICH THE
CONGRESS CAN CONSIDER AND, HOPEFULLY, EMBRACE.
FROM MY OWN PERSPECTIVE, I BELIEVE THAT ANY LEGISLATION TO
AMEND THE INDIAN GAMING REGULATORY ACT MUST EMBODY ONE BASIC
PRINCIPLE. THAT IS, IT MUST PROTECT THE INTEGRITY OF ANY GAMING
OPERATION BY ASSURING THAT IT IS ADEQUATELY REGULATED AND
ENFORCED, AND ENSURE THAT IT DOES NOT PUT OTHER STATE-REGULATED
INTERESTS AT A COMPETITIVE DISADVANTAGE.
73
-4-
THE LATTER CONCERN WAS SPECIFICALLY RECOGNIZED BY THE 1988
ACT AS A LEGITIMATE AND IMPORTANT FACTOR TO BE CONSIDERED.
IT IS MY BELIEF THAT STATES AND THEIR CITIZENS HAVE THE
RIGHT TO INSIST THAT ANY GAMING OPERATION WITHIN THEIR BORDERS
RECEIVE THE SAME LEVEL OF REGULATORY SCRUTINY THAT THEY IMPOSE ON
THEIR OWN LICENSEES.
THE REASON FOR THIS IS NOT SO MUCH A SENSE OF FAIRNESS TO
THE LICENSEES, BUT THAT THE STATES CLEARLY HAVE A PROTECTABLE
INTEREST IN THE INTEGRITY OF ALL GAMING.
IF GAMING OPERATIONS ARE ALLOWED TO TAKE PLACE ON AN INDIAN
RESERVATION AT A LOWER LEVEL OF SCRUTINY THAN THAT WHICH IS
ACCORDED TO OTHER GAMING OPERATIONS IN THE STATE, THAT THREATENS
TO UNDERMINE THE PUBLIC'S CONFIDENCE THAT GAMING CAN BE
EFFECTIVELY RUN AND SUPERVISED.
AS LONG AS STATES ARE GOING TO BE REQUIRED TO AGREE TO A
COMPACT, AS THE INDIAN GAMING REGULATORY ACT NOW PROVIDES, THEN I
BELIEVE THE INDIAN GAMING OPERATIONS MUST EITHER SUBJECT
THEMSELVES TO THE JURISDICTION OF THEIR STATE'S REGULATORY
SYSTEM, OR BE REQUIRED TO ESTABLISH A REGULATORY SYSTEM OF THEIR
OWN WHICH IS COMPARABLE TO THE STATE'S IN EVERY RESPECT.
INDEED, I BELIEVE THAT WAS THE CLEAR INTENT OF THE 1988 ACT.
UNFORTUNATELY, THE ACT HAS NOT WORKED AS WELL AS IT WAS INTENDED.
BY COMPARISON, I BELIEVE THE NEW JERSEY CASINO CONTROL ACT
OFFERS A MODEL TO NOT ONLY REGULATE THE GAMING INDUSTRY, BUT ALSO
TO ASSURE THE PUBLIC'S CONFIDENCE IN THE INTEGRITY AND
CREDIBILITY OF THE ENTIRE INDUSTRY.
74
-5-
IN NEW JERSEY, ENFORCEMENT OF THE CASINO CONTROL ACT IS
DIVIDED AMONG TWO AGENCIES: THE CASINO CONTROL COMMISSION, WHICH
IS IN CHARGE OF LICENSING AND REGULATORY AFFAIRS; AND THE
DIVISION OF GAMING ENFORCEMENT, WHICH IS THE INVESTIGATIVE AND
PROSECUTORIAL AGENCY.
AT THE PRESENT TIME, THE COMBINED STAFFS OF THESE TWO
AGENCIES IS IN EXCESS OF 850. THEIR COMBINED BUDGETS ARE
APPROXIMATELY $56 MILLION, EVERY PENNY OF WHICH IS PAID FOR OUT
OF FEES AND ASSESSMENTS AGAINST THE CASINO INDUSTRY AND ITS
LICENSEES.
SOME OF WHAT THE CASINO CONTROL COMMISSION DOES IS OBVIOUS.
THEY LICENSE THE COMPANIES AND THE PEOPLE WHO WORK FOR THE
COMPANIES WHICH RUN CASINOS. THEY ALSO SUPERVISE AND SET THE
RULES FOR THE GAMES, AND ARE VERY INVOLVED IN SUPERVISING THE
PASSAGE OF MONEY AND THE CONTROL OF CREDIT. THOSE ARE THE CORE
MISSIONS OF THE CCC.
BUT THERE IS MORE TO THE REGULATORY SYSTEM IN NEW JERSEY
THAN JUST THAT.
THE STATE ALSO LICENSES AND REGULATES ANY BUSINESS THAT DOES
BUSINESS WITH THE CASINOS ON A REGULAR BASIS. THIS INCLUDES
GAMING-RELATED OPERATIONS, SUCH AS THOSE WHICH SELL CARDS OR DICE
TO THE CASINOS, AS WELL AS NON-GAMING BUSINESSES, INCLUDING THOSE
WHICH SELL THEM LIQUOR, FOOD, FURNITURE, AND SO FORTH. THE STATE
INVESTIGATES EACH OF THESE COMPANIES AS WELL AS THEIR PRINCIPAL
OFFICERS.
75
-6-
IN ADDITION, ANY COMPANY WHICH IS INVOLVED IN LOANING MONEY
TO A CASINO TO BUILD OR FINANCE THE CONSTRUCTION OF A CASINO-
HOTEL, MUST BE LICENSED TO DO SO. AS A RESULT, THE LAW BLANKETS
THE CASINOS THEMSELVES, ALL COMPANIES WHICH DO BUSINESS WITH THEM
ON A REGULAR BASIS, AND ALL THE FINANCIAL SOURCES OF THE CASINO
COMPANIES.
I POINT THIS OUT BECAUSE I BELIEVE IT ADDRESSES THE THREE
CENTRAL ISSUES IN THIS DEBATE: WHERE WILL THE REGULATION OF
INDIAN GAMING ACTIVITIES TAKE PLACE, HOW WILL IT BE PAID FOR, AND
WHAT FORM IT WILL TAKE.
ONCE AGAIN, I BELIEVE THE NEW JERSEY EXPERIENCE PROVIDES AN
EXCELLENT MODEL FOR ADDRESSING EACH OF THESE CONCERNS.
CERTAINLY THERE ARE OTHER SIDE ISSUES TO BE ADDRESSED AS
WELL. FOR EXAMPLE, SERIOUS QUESTIONS HAVE BEEN RAISED ABOUT THE
EFFORTS BY SOME TRIBES TO EXPAND THEIR ENCLAVES TO LANDS WHICH
ARE NOT A PART OF THEIR RECOGNIZED RESERVATIONS. I FIND THAT
ESPECIALLY TROUBLING.
AT THE PRESENT TIME, THE INDIAN GAMING REGULATORY ACT IS NOT
PROVIDING AN ADEQUATE LEVEL OF PROTECTION, WITH SOME NOTABLE
EXCEPTIONS. INDEED, IT CONTAINS LOOPHOLES AND AMBIGUITIES WHICH
CRIPPLE ITS EFFECTIVENESS.
IF WE DON'T ACT SOON TO CORRECT THE DEFICIENCIES IN THE LAW,
IT IS ONLY A MATTER OF TIME BEFORE THE PUBLIC'S CONFIDENCE IN THE
INTEGRITY AND ACCEPTANCE OF SYSTEMS OF LEGALIZED GAMING WILL BE
DESTROYED.
76
-7-
IF THAT HAPPENS, THE IMPLICATIONS OF SUCH A CATASTROPHE WILL
GO WELL BEYOND THE DAMAGE TO ANY INDIVIDUAL CASINO OR INDIAN
TRIBE OR STATE. IT WILL UNDERMINE THE PUBLIC CONFIDENCE IN OUR
ABILITY TO KEEP ORGANIZED CRIME AND OTHER ELEMENTS OUT OF THIS
INDUSTRY .
MR. CHAIRMAN, THESE ARE MY OVERALL CONCERNS. I LOOK FORWARD
TO WORKING WITH YOU TO DEVELOP A FRAMEWORK WHICH WILL ENABLE US
TO ADDRESS THESE CONCERNS. THANK YOU AGAIN FOR ALLOWING ME TO
APPEAR BEFORE YOU TODAY.
# # #
77
/
Mr. Richardson. The chair recognizes the gentlfc.
Jersey, a very distinguished member of this body.
STATEMENT OF HON. MARGE ROUKEMA, A REPRESENTAl i .
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mrs. ROUKEMA. Thank you, Mr. Chairman. I am certainly deeply
grateful to you. Chairman Richardson, for permitting me the oppor-
tunity to share this testimony today with the subcommittee.
The proliferation of Indian gambling is a serious national issue,
and it is a very serious issue in New Jersey, particularly in my
Fifth Congressional District. Gaming, casino or otherwise, can
produce serious consequences for the host community.
It would take months to address all the sociological, economic,
moral, legal, and law enforcement problems associated with gam-
bling. These issues are so serious to the citizens of New Jersey that
when casino gambling was proposed for Atlantic City, the question
was subject to Statewide referendum, and an amendment to the
State Constitution was required.
While I hope that the subcommittee will address each of the
aforementioned issues in subsequent hearings, I come before you
today to discuss a situation presently pending in my district which
has broad Indian gaming ramifications and which raises some seri-
ous questions, in my opinion, about illicit financing of some Indian
gaming operations.
A group of people residing in parts of my district have been seek-
ing Federal recognition as a Federal Indian tribe for nearly 20
years. When representatives of the Ramapough Mountain People
first approached me in the mid-1980's, seeking a private bill rec-
ognizing the group as an Indian tribe, I was skeptical of the mo-
tives behind their drive for recognition. After all, this was a clear
attempt to circumvent normal procedures.
To this day, the leaders of the Ramapough community have
maintained that their sole reason for seeking Federal acknowledg-
ment is to improve their housing, education, and social welfare.
However, from my very first discussions with the group almost 10
years ago, it has been quite clear to me their sole interest in Fed-
eral acknowledgment is to circumvent local. State, and Federal ju-
risdiction for the sole purpose of establishing casino gambling in
Bergen County, New Jersey.
No member of the group has ever contacted my office to discuss
improvement in housing or education. They are integrated with the
local communities and have been for some time.
On November 20, 1985, representatives of the Ramapough people
signed a 15-year contract with Rory Management Corporation of
Elizabeth, New Jersey. The purpose was to finance the group's Fed-
eral lobbying efforts in return for a percentage of future gaming op-
eration profits.
At the time, the president of Rory Management Corporation was
a Mr. Robert Frank of Miami, Florida, who, shortly after signing
the Ramapough agreement, resigned as president of a similar firm
under allegations of criminal involvement with a California Indian
tribe's gaming operations.
78
Subsequent newspaper reports indicated that Rory Management
Corporation was prepared to spend several million dollars in order
to secure Federal recognition, land, and gaming facilities for the
Ramapough group. Mr. Frank was to receive 49 percent of the
gaming profits. The Ramapoughs were guaranteed $29 million over
15 years.
On September 13, 1993, an article appeared in the New Jersey
Law Journal documenting Mr. Frank's ties to organized crime. Ac-
cording to the Journal, he has had long-standing ties to Mafia
bosses.
Mr. Chairman, I would like unanimous consent to have the New
Jersey law article entered into the record.
Mr. Richardson. Without objection.
[The article follows:]
79
Was Mob Behind Tribe's Casino?
By Itn O'Biioi
The HMD wlxm the Raniapoiigh
MouaaiD f^ople of Bergea County
once retained to hdp them gain fed-
eral reoognitiaa is a bona &de Indian
triK — and mbvqacnlly manage any
guniag operatiaas on ibeir reservation
— has kng-staoding lies to an asso-
date of Mafia boss Anthony (TUmac)
Aoocttmo.
AuLCtuuu is the kwgnsie head of
the New Jeney EKtioD of the Lac-
drsB crime bmily wiio has been
iovoived in biafo on Indiaa reKrva-
tioBs. aad dse^rtioe, for mioy yean.
Oo Aug. 13, be was ooavKied in
Ocean Cooty of ncketeering, exlor^ '
tkn, ooQspsacy and Inarting an or-
pHned-criine bnity. wtiBe aa ua-
deitng of bis was convicted of mul^ °
*»- ■ L
The consukaol who signed oa with
die reclusive Ratnapoogh dan ia 198S
is Robeit Frank of Miami Lakes.
Ha., who has beea iorvoived in biogo
hails elsewhere siace tlK 1970s, i>-
cludiog one oo aa ladian neaervation
in which a dvil coun ruled he com-
milted fraod.
Frank is a kngiiiDe a^vyiatr of a
inajor bingo operator, James L. Wil-
liams. of Boca Ratoo, Fla., who is
described by taw-enfarcemect aulliar-
tties as a clcBe .winriafr of Accetnoo
as well as of olfaer ondenporid fig-
ures, iarfadlt^g die now-decened £t-
totc Zappi, a capo in (be *^'h*"""
crime tkoatf. WOaum wai conviaed
in a fedetal oouit in Flocida in 1987
of tax eradoo^^ecificaliy, of dom-
miag.abKa $330,000 fiiom-Kveni
Bniwaid Coonty biago opentiaBs,
inrhirtiag one openied by Incfiaos. He
served two yean.' ' . " "
The issue of poteatial orputized-
crime infliMmrr has become a hot
botlon in die high-HakES battle over
the Ramapnngbs' (kive for teoog-
mtkn. Oppaootts. Jnrinding casioo
owaer Dcoaid Tramp aitd Bergen
County's two tepicsentaives in die
House, Repablican Maige """f'n*
and Bemoan. Robert Tonice&i, have
raised die qKcter oTotgasitsd dime,
while backers ot. the Ramapougbs
have biasaed the tactic as imftmnrtnrl
and IS fear-mougej aig*
The Ranapovghs' ttanef, Gevge
Sdmeider of Fairfield's Loiber,
Schneider. Nozzi, Yidaiess St. Bil-
iokas, as wdl as Ifaeir chief. RooaJd
Van IXiak. aqs Prank's role ended
two yean ago. aUawgb bodt say be
frtnams. "a friend .of Inc tiAe" imei^
esled' ia teniae odr oaiy k the push
ooMn<uB>p(«n«iS4
80
NEW jEtser LAW joumwAi. sgrngjBgB i*. l**»
us N.J.LJ. lU
Was Mob Behind Tribe's Casino?
lot uitm] recofliltlon bul in suh-
9^^)u<n) veniurcs
rrtMd of tbc Tribt
Sart \*ii Punk- "W« )om tli tiea
».tb Bot Fr»nk b«c«us« h« Juti no
nut or mMey. He kft on ftOOd wrmt
and he U ■ |ood fileod. W« cip«ci lo
Kc htm i( ou» o«l powwow "
«'>Mn tob] of Bob FrmAk'a dcalmM
w,oi T^illiam*. sod th« WiUltmi n
conitdetfd by fcdeial pro»ecuiori lO
b« I (ooipifnc utociale of Acceliuro.
Van Dvrh uid. "I ffl gUd wc TounJ
thai out Take tny «ord Tor It H« hu
no (jiv<)l\tm<u u ill None. Nothing
•I all Dm BIA (Buruu of Itiditn
AlTainl hm> to ftp(ro«e til buiinest
dcilin|) ai^ iKat »ould bto« ui out
of tht Mter"
frmfk, 31. • romwr Eluabcth
mident tnd Ort«tlm« luUonal »d-
vcniimt mwager for 37if Dotty
J.^unuii v«rp«per ia Eltubeih, now
defuiKt. coaKrTTB Otai hU offtciil rok
*i(h Um tri^ ended in 1991 Bui he
loo uyi tfMt he U hopeful thst ihouid
the ItanipougSf glin tecofnltion,
K« It h« hired to hdp with eithct
pmiPS Of fcpoomic development
• Im y*rf clow ic ih« uib«." oyi
Frank. »lding. "K iJtey wtTC |Oing 10
an rxnehing iit N<w Jeri«y. Id Ilk*
in cotrc Mck home wmI help."
Frank, Uibe »oon»ey SchMidcr.
chtcf Van [>unk and the liibe'a
V^tkhiigion. DC. Votjbylu. Albert
Caultoo. •>! d«CT)&a Prank'a curreoi
ktarwi as acnront wahtof In the
<«.in|i ihould the cUn receive Uibtl
OtVf ! , pantcoUrty law enfoice-
mcni c-ffielali. char3Ci«rirt Frank ai a
ftstit fct Williima and Wimims' |
Mafia •'(fociaict And Wlltianu. uy 1
If^era'. f ro»«cutt>r». has been Involved
in bingo iinc« ht mn an Akfcn bingo j
hoil in 1973 fw JoKph Merle, de-
^Lrribed by iuthoT.lici u an OhIO
hinjrt kn| convicted in 1979 of con-
duciini an ill«t«! bwjo operation,
gfarMJ Ui-tft and gatnbllng.
Ftink I invoWetnent with Williams
f;nca tack to 1978 -vhen. according to
toutl pipert rilei< h)' the rcdctal
Mum) Siiike Ftwcc In 1911, Frvnk
■ paved 4 miflor fc1« Hi anetnpta b)*
U'liiiam anJ Mherr to btit* a Rmida
'.-.iie tCMBioT lo p«ish tnroufh M))(o
ifsi^ladc-n favnrablt to them
Ace«tlur« a« Blace Man
Frajik ackjtowletltes ilnling with
Wiiittm%. but layi be hain't dealt
viih him iltKc late 1985.
As fcr Aocemirs, who moved to
Saudt Ftonda in tSe I970l » avoid
<rulfytn,t before Ihc New Jericy Suta
Cotnmltston on Itwfti^aiton. Prank
layl, "1 k/w>w Atuhooy Yean ago I
mei hlni. 1 grew up in Petersburg (an
F]uah«4h Mlihborhood) and he use to
come O'er to Eltnbaih. His grand-
parew» were friends wUh my graAd-
parenii, but I nevifr h«d tnyOiing to
do wuh him "
Accatturo. according to foderml ao-
thorttln. becjma invoNed in running
»nd aujifilytnt blngo 0(>*ratipni on
Lftd^ rtaervmnona and clacv^er*.
Accofdini lo a prc-aeniCDce aiemo
itndum m WUUanu' ut caae, Ac-
ccmirr held tntereiu in at leatt two
biogo halli ownel by WiHiama in
SovA Florida In the ewhr t980a. n
well u In another Wilflama-owMd
binjo opcratl'Mt In Ailama
A :979 For^tM migizliw irtWk
dncrib*d Accetcuro aa "(be khigpla
of Florida biQ<o" and detailad Wll-
liarnj' conncctlona 10 ACCtttUfO. ^H-
hams sued Forhis but »-t[hdrew hla
sjii voluntarily after he wbb dcpoaed.
In addition, (ha mcfnoiandum vay«
that Atcenuro Operaiad a paper com-
pany that ruppttcd blngo cvd> to
halla. including some on Indian rea*
ervaik>o>. AccenufO also rrled lo boy
a riorida pr«5s company rtiat pro-
duced blngo lupplkJ. with WillUma
helping AccrtlufO wHh Iha purchaH
re(.oriat»ona.
Riomo random,
wnilen by tulilant U.S. aaomeya I.
kaidalt Gold and Thomas McNuUy to
Mirch 1987. seven weeks tfter Wll-
liams' convtciton. describe* Accetluro
19 lomcona who sklmi proflta from
tingo opcradom Ootd and NicNuliy
ictuse Williams of mnfllnf Nngo
fames for charities, boih ret! and
SINQO l» »•
GAMIi Robert
Prank, accn M
rlyht during •
press coofertDC*
wllhUM
iUfiiapeu^ iB
Mahwah Sa IMP.
niTcr dlKlrvrd M
(he KoM tbat h*
WHS befng BCCV9C4
tu CttfforrJa of
sUmmlttt f^^««^
ftn Ifidita>nai
blRfo hall. Vnuik
sap Im r«s!cT«i4
n-om (ha Mofe
minftgcmcnt firm
ha h«adfd wid
did ool know
uTUtI csncd b7 tbt
law Joumai ib»t
h« wu cUc4 for
Uma6 and
4fnb*z2leti*«nt hi
a $534.«0f
judnmeat aigalost
hira bmI bli
partnara.
Mococied, with moil of the proflu
gciiig. nietally, to WlUtenu* com-
panies rather than the charities.
Wllltama. for huuiMsa, wu oocc
shut down by authorltlas In NashvlHe
who auipccird the proceeds wsre not
gcing to churity at stawd. AfUt baJBg
shut down, th« «xecuilva director of
tht charity scl up by WtUi^ms. the
A.-nerican Hypcrtcnsioo AasoclMton.
tnc . obtained a mail-order ordtitktloii
tr4 rented for a charitablo loUc-
it^itions permit aa a mlnlsttf. The
enacuUv* director was Frank Oerillo,
detcribed in coun papcrt ti an asso-
ciate of Accettuio wno wu indicted
with th* mob bo»« In 1980 for fixing
races in Rorlds. Ocrillo was coo-
victed in 1981, while AcccAuro wu
found to b« incompctctil to stand trial
on medical grounds. Accethiro't net
worti was p«g8*^ by du FBI at soma
$33 mlUlon du/lnt (he ear<y 1980|.
According to la w-on force ment of*
fklllS in is tai tvaakM case and
ebewhrfo, Williams' has a hk»toiY of
owning and ninivhig businesses, from
blngo pulorv lo swtp olubs, wW»
othen rroniteg for him. And io at
leaat three cases, Frank appstrs lo be
frontinR for WUIiams.
Id the first case. FrttA. according
to New Meitco authofkW. cama to
AtbDqtierquc b 1981 ht an stttmpt to
open a high-ciikts bingo bushMSS for
William!! According lo a 1982 rtpon
Issued by The Ooverrwr'i Orga-*uxad
Crime Prevention CommlMloD titled,
"Infittrstioa of Organlicd Crime Into
Blngo io N«w Maiico." Fnnk failed
to dlacfoae both his sod WUIiaim'
interest ht the proposed bingo hal).
Frank, according (o iba rrpovt, uiod
the name of sft tmployte of his from
Hiakah Hall, s Witgo parlor In Ffor-
kla, a> the owner, when In reality
Williams was to bookroU the potantial
business ss well n aivxher venture on
en Indlin reservation.
PiMk •cki»«4e^ei ploying s rola
bi trying to an up the blngo opertKm
(or Williams lo Albuqucroue in 1981-
83. and hrtiter acknowleogea thai the
named principals In the proposed
vcMura worked at Hialeah HaD.
which ha owned. But be says, "I was
on m> way to Califon^la tad Jimmy
asked me lo atop by arrd check il out.
Me valued by opinion, and he paid
me."
HWe^ Hall t«pf«eeMS the second
oumcic of Prank allegedly frontiog
for WllUsms. While Frank admits he
owned Iho boitoess, and white Florida
corpormte reconls llH him. and not
Wtllbme. aa ea offVccr of tbe busl-
MW. the proaecuatvs In the WUIlana
tax case wrolo hi 1917 thit "there
WW elcnr evUence thai (WUllams)
wu riming Htalcah Hall. " Williams'
name was on the leatc, reported the
proaccutora.
Says Frank about Hialeah HsU.
'Jimmy Williams bulh k end I owoe^
il Th« butidlr.! was leaaed to a
Charity so I was fu« ihe landlord. "
The New Msulco report said that
the HUleah buslocaa wai cited fbr
violallou of Florida's ganring stat*
utei Frank says. "Thai's inw, but I
Juti owvsd ttM building "
Alleged SUiimJiit •! Hnae Profhg
In iM third cun^ ched by aa*
thOfkiai, Prsnk. ■ 1937 graduate of
SetOA Halt UnKeriity. uraa himself
accused, slong wldi Williams, of
skimming from an Indian- operated
blngo hsl! In Jackson. Cs
The eccusstlofi wss being made In
early 1986, s f*w momhi sflcr the
Rarrjpoughi' chief. Van Dunk, wu
Introducing Prank k) Ihe New Jersey
prrs« sa (he tribe's Mw tnonsg*'"*^
coTuultint. Frank's New Jersey com*
pany, Rory MsfMgenwrt Corp.. had
signed t oofflract wMh the clan lA
1983 to help In the effort to secure
recognliioo, snd ti> subsequently run s
lighstakcs blngo hall for 49 percent
cf the revenues; the Ramapoughs
wars to |« 51 percinl. The contract
ruaraoteed Ihe tribe 129 mllilo» over
13 ytari. aocordlnf to Fraok eod Van
Dunk.
About seven months sfksr Ihot )uly
1983 aanouDcemem. a blngo hall bo-
ing operated by Prsnk, Williams and,
according to foderal proaecuton. thTCO
convicted felons. In Jackaon — about
30 mites* northeast of Seeiameoto —
wu closed down after four month*
when ks chief flMnelai backer ae-
cosed ihe operaton of skimming rann
than StS.OCC a night After yea'i of
Utigaifon. aa Amador Counhr JudfS
awarded a )udcr'>*nl of S5>4.o00 Dl«t
farterer and sttomsys f^es to CaH-
fomfcs dov»1op*f Lynn Awbry in Oc*
lobcr 1991. Though about half the
judgmem wu for IndemnirVctilon,
other causes of action bcluded fraud
and cmbenkmcnt.
Freak and WUHams left the atito
and the Ju^ment wu ordered by
default. Federal proeecuton In Rorlds
sty, ttiotilb. Ihsl the Wllllams/Frsnk
group, sner Rcurini u\ ernployment
oontraa whh the Mi-Wuk Indians,
•old 90 percent of tbe contraa to
ennther groi^f for $730,000
Franlt 'Restt**' •> l*mddsnl
Ai hi liM ea«e aT the .v-«' }9tzt/
corporation, »ory Managcmeai.
Prank wu the presktent of Arrow
Management Services, Inc., Ki ths
lackson venture Arrow rtpreaented
itself as s busloeu eioen in running
blngo halls on reservations.
Frank, kowavar, says ha resigned
u pruk9eni of Arrow MsnogetncM on
Nov. 39. 1983, "before the accusa-
tions Started." He ssyi he was wv-
comfortable "whh the teem brought
In by WiUiama," MClAcally, (he
three pecplt he ssyi fw later discov-
ered were convicted Woru f^om New
Buland
He produced a ietiar fVom the
PloiidB ttlomey teprasemtng Williams
which achoowledm thai Frank ra>
signed on Nov. 29, I9t3, and thcre-
fote sbouM not have bcee inckided u
en InKlal plilnilff or • subsequent
cross daf^ndsot. Initlslly. Frank,
Williains and Arrow h^aoageraeat
sued Awbry for Inttrfsrlng Mm their
eontrsa, and Awbry counlaMued.
The Iswyer, Srvce Randall of Fort
Lauderdale, eonduded In the June
81
Uml
nimmuum
i
«i ^ Iff 155111
il --irhsls
" - 5-3,. *ii * S = v t
:"£•=<», „a«^ St |i sSafiSS
.=1
=^^^111
82
Mrs. RouKEMA. Representatives of the Ramapough group claim
all official contact with Mr. Frank and his company have ceased
since 1991. However, the same Ramapough officials recognize him
as a close friend of the group, and they suggest that Mr. Frank will
assume an official capacity with the group should the Bureau on
Indian Affairs grant the Ramapoughs Federal acknowledgment.
Clearly, Mr. Frank and his associates are not far removed from
the Ramapough efforts and somebody is continuing to pay large
sums of money for a Washington lobbyist to manage the
Ramapoughs' petition that is currently before the BIA.
It should be noted in fairness that not all of the Ramapough peo-
ple supported the contract. For those who were in opposition, I
deeply regret that the Ramapough people may be pawns in a high-
ly organized effort to bring high-stakes gambling to northern New
Jersey.
Many local officials and citizens in the affected areas of my dis-
trict have contacted my office in absolute alarm over their inability
to take action against, or simply manage the arrival of, high-stakes
gambling in their back yards not to mention all of the societal ills
that may accompany it.
Is it fair to ask the taxpayers to pay for increased law enforce-
ment when they have no control over the gaming decisions?
Mr. Chairman, I am sure that we can all agree, Federal acknowl-
edgment as a Native American tribe is a serious matter. Native
American recognition and benefits should only be granted to people
with legitimate claim to it and to groups who have a general inter-
est in preserving their culture and heritage, not for the purpose of
exploiting the Indian Gaming Regulatory Act.
Failure to control the growing number of spurious claims to fed-
eral Native American status, brought about by the lure of big
money from high-stakes gaming following approval of the Indian
Gaming Regulatory Act, only denigrates the proud heritage of our
Nation's first inhabitants.
In making this distinction, I realize the Indian gaming experi-
ences of an established, historically recognized, tribe, free from the
coercion of unsavory interests seeking to make a fast dollar, may
differ from those of an upstart group seeking Federal Native Amer-
ican status.
However, the subcommittee must realize that while tribal sov-
ereignty may not significantly affect citizens' rights on a large res-
ervation in a rural area, it absolutely tramples the rights of tax-
paying citizens in crowded urban and suburban areas such as Ber-
gen County, New Jersey.
Whether the subcommittee wishes to recognize it or not, Indian
gaming has become a big business. The gaming business, by its
very nature, attracts speculators and investors with large sums of
cash. By failing to sufficiently regulate Indian gaming and by ne-
gating State and local autonomy regarding Indian gaming oper-
ations, the Federal Government is inviting disreputable individuals
or organizations to become involved in gaming operations.
M^e no mistake, BIA acknowledgment of the Ramapoughs will
result in Indian gaming in northern New Jersey and it will almost
surely bring organized crime with it under these circumstances.
83
I believe the current example from my district in northern New
Jersey raises many questions about the Federal Indian acknowl-
edgment process, potential infiltration of organized crime in some
Indian gaming operations, the lack of Federal oversight for Indian
gaming operations, and the need for comprehensive reform of the
Indian Gaming Regulatory Act.
Accordingly, I believe Congressman Torricelli's legislation, H.R.
2287, the Gaming Integrity and State Law Enforcement Act, de-
serves full and fair consideration by this subcommittee and the
House of Representatives. I am a co-sponsor. But, most of all, I be-
lieve it is time for the Federal Government to allow the citizens of
each State to reassert control over the proliferation of Indian gam-
ing operations.
Thank you, Mr. Chairman, for allowing me to state my observa-
tions here and to state the concerns on behalf of the citizens of the
Fifth Congressional District in New Jersey.
[Prepared statement of Mrs. Roukema follows:]
84
TESTIMONY OF THE
HONORABLE MARGE ROUKEMA
BEFORE THE HOUSE NATURAL RESOURCES
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
OCTOBER 5, 1993
I am grateful to Chairman Richardson for affording me this
opportunity to share my testimony regarding Indian gaming with the
Subcommittee on Native American Affairs here today. The proliferation of
Indian gaming is a serious national issue, it is a serious issue in New
Jersey, and it is a very serious issue in my congressional district. New
Jersey's Fifth.
Gaming, casino or otherwise, can produce serious consequences for the
host community. It would take months to address the sociological,
economic, moral, legal, and law enforcement problems associated with
gambling. These issues are so serious to the citizens of New Jersey that
when casino gaming was proposed for Atlantic City the question was
subject to state -wide referendiim, and amendment of the state constitution
was required.
While I hope the subcommittee will address each of the aforementioned
issues in subsequent hearings, I come before you today to discuss a
situation presently pending in my congressional district, which has broad
Indian gaming ramifications, and which raises some serious questions
about illicit financing of some Indian gaming operations.
A group of people residing in parts of two communities in my
congressional district have been seeking federal recognition as a federal
Indian tribe for nearly 20 years. When representatives of the so called,
"Ramapough Mountain Indians" first approached me in the mid-1980s seeking
a private bill recognizing the group as an Indian tribe, I was skeptical
of the motives behind their drive for recognition.
To this day, the leaders of the Ramapough community have maintained
their sole reason for seeking federal acknowledgment is to improve their
housing, education, and social welfare. However, from my very first
discussions with the group almost ten years ago, it has been quite clear
to me their sole interest in federal acknowledgment is to circumvent
local, state, and federal jurisdiction for the purpose of establishing
casino gambling in Bergen County. New Jersey.
On November 20, 1985, representatives of the Ramapough people signed
a 15 year contract with Rory Management Corporation of Elizabeth, New
Jersey, to finance the group's federal lobbying efforts in return for a
percentage of future gaming operation profits. At the time, the
President of Rory Management Corporation was Mr. Robert Frank of Miami,
Florida, who shortly after signing the Ramapough agreement resigned as
President of a similar firm under allegations of criminal involvement
with a California Indian tribe's gaming operations.
Subsequent newspaper reports indicated Rory Management Corporation
85
was prepared to spend several million dollars in order to secure federal
recognition, land, and gaining facilities for the Ramapough group. Frank
was to receive 49 percent of the gaining operation profits. The
Rcunapoughs were guaranteed $29 million over 15 years.
A September 13, 1993, article in the New Jersey Law Journal .
indicates Frank's ties to organized crime are well established.
According to the Journal . Frank has "long-standing" ties to Mafia boss
Anthony Accetturo, head of the New Jersey Luchese crime family, who was
recently convicted by the state on charges of racketeering, extortion,
conspiracy, and leading an organized crime family. Some of Accetturo 's
criminal legacy reportedly involved Indian bingo operations. I will
submit a copy of this article for the record, and remind the subcommittee
that none of these accounts have been publicly challenged or refuted.
Representatives of the Ramapough group claim all official contact
with Frank and his company ceased in 1991. However, the same Ramapough
officials recognize him as a close friend of the group, and they suggest
that Frank will assume an official capacity with the group should the
Bureau of Indian Affairs (BIA) grant the Ramapoughs federal
acknowledgment. Clearly, Frank and his associates are not far removed
from the Ramapough efforts, and somebody is continuing to pay large sums
of money for a Washington lobbyist to manage the Ramapoughs' petition
before the BIA.
It should be noted, not all of the Ramapough people supported the
contract with Frank. For those in opposition, I deeply regret that the
Ramapough people may be pawns in a highly organized effort to bring high
stakes gambling to northern New Jersey.
Many local officials and citizens, in the affected areas of my
district, have contacted my office in absolute alarm over their inability
to take action against, or simply manage, the arrival of high stakes
gambling in their back yards- -not to mention all of the societal ills
which accompany it. Is it fair to ask the taxpayers to pay for increased
law enforcement when they have no control over Indian gaming decisions?
Mr. Chairman, I am sure we can all agree federal acknowledgment as a
Native American Indian tribe is a serious matter. Native American
recognition and benefits should only be granted to peoples with
legitimate claim to it, and to groups that have a genuine interest in
preserving their culture and heritage- -NOT for the purpose of exploiting
the Indian Gaiming Regulatory Act. Failure to control the growing number
of spurious claims to federal Native American status, brought about by
the lure of big money from high stakes gaming following approval of the
Indian Gaming Regulatory Act, only denigrates the proud heritage of our
Nation's first inhabitants.
In making this distinction, I realize the Indian gaming experiences
of an established, historically recognized, Native American tribe, free
from the coercion of unsavory interests seeking to make a fast dollar,
may differ from those of an upstart group seeking federal Native American
status. However, the subcommittee must realize that while tribal
sovereignty may not significantly affect citizens' rights on a large
reservation in a rural area, it absolutely tramples the rights of
taxpaying citizens in crowded urban and suburban areas.
86
Whether the subcommittee wishes to recognize it or not, Indian gaming
has become a big business. The gsuning industry, by its very nature,
attracts speculators and investors with large sums of cash. By failing
to sufficiently regulate Indian gaming, and by negating state and local
autonomy regarding Indian gaming operations, the federal government is
inviting disreputable individuals or organizations to become involved in
Indian gaming operations. Make no mistake. BIA acknowledgement of the
Ramapoughs will result in Indian gaming in northern New Jersey and it
will, almost surely, bring organized crime with it!
I believe the current example from my district in northern New Jersey
raises many questions about the federal Indian acknowledgment process,
potential infiltration of organized crime in some Indian gaining
operations, the lack of federal oversight for Indian gaming operations,
and the need for comprehensive reform of the Indian Gaming Regulatory
Act. Accordingly, I believe Representative Robert G. Torricelli's
legislation, H.R. 2287, the "Gaming Integrity and State Law Enforcement
Act," deserves full and fair consideration by this subcommittee and the
U.S. House of Representatives. But most of all, I believe it is time for
the federal government to allow the citizens each state to reassert
control over the proliferation of Indian gaming operations.
Thank you, Mr. Chairman, for allowing me to share my feelings and the
concerns of many citizens in New Jersey's Fifth Congressional District
with you here today.
87
MARGE ROUKEMA
(Tonfircss of the lanittd States
liouse of HqirtstntatiDts
IDashington, ©£ 20515-3005
EDUCATION AND LABOR COMMITTEE
SELECT COMMITTEE ON HUNGER
October 6, 1993
The Honorable Bill Richardson
Chairman
Subcommittee on Native American Affairs
1522 Longworth House Office Building
Washington, DC 20515-6205
Dear Chairman Richardson:
During the Subcommittee on Native American Affairs' October 5, 1993, hearing on Indian
gaming, some members of the subcommittee and the first panel disputed my testimony regarding the
eligibility of the Ramapough Mountain people to conduct Indian gaming on their "tnist" lands, should
the group receive federal acknowledgement from the Secretary of the Interior. I would like to submit
for the official record of the hearing a summary of the provisions of Section 20 of the Indian Gaming
Regulatory Act (P.L. 100-497), which clarifies the concerns I raised as part of my official testimony.
Section 20 of the Indian Gaming Regulatory Act (IGRA) generally prohibits gaming on lands
placed in trust for an Indian tribe by the Secretaiy of the Interior following the date of enactment.
However, under Subsection (b), the prohibition on Indian gaming does not apply when the lands
taken into trust by the Secretary of the Interior are part of "the initial reservation of an Indian
tribe acknowledged by the Secretai^ under the Federal acknowledgment process."
If the Bureau of Indian Affairs (BIA), and the Secretary of the Interior, officially acknowledge the
Ramapough group, the lands taken into trust by the Secretary would be the tribe's "initial reservation,"
and therefore, gaming would be permissible under terms of the IGRA. I have verified my
interpretation of this provision with the Director of the BIA Indian Gaining Management office, Hilda
Manuel, and Ms. Maureen Murphy, Legislative Attorney, for the CRS American Law Division.
I realize the provision of the IGRA to which I refer has never been tested in federal court.
Nevertheless, I believe my concerns regarding Indian gaming in northern New Jersey are well founded
based upon Section 20 of the IGRA. I hope the subcommittee will consider my thoughts, and I hope
this letter clears up any misunderstanding regarding my testimony.
I am looking forward to working with you and the entire Subcommittee on Native American
Affairs in the near future.
^incerely.
ik
Marge 'Roukema
Member of Congress
MSR:bb
cc: The Honorable George Miller, Chairman
Members of the Subcommittee on Native American Affairs
88
Mr. Richardson. I thank the gentlelady.
Before some of my colleagues are recognized for questions, if any,
I would like to aclmowledge the presence of the chairman of the
fall committee, the gentleman from California, and I would like to
recognize him for any opening statement or to be the first to ask
questions of this panel.
STATEMENT OF HON. GEORGE MILLER
Mr. Miller. Thank you, Mr. Chairman.
I will include my opening statement for the record and just want
to thank you for holding these hearings and for our colleagues in
the attendance of these hearings.
I think it is terribly important that we have the ability on behalf
of the public to sort out what are unfounded allegations and what
are allegations that are being used in rather clever lobbying at-
tempts against the establishment of Indian gaming and what is, in
fact, fact with respect to the problems of organized crime or any
other kind of criminal activity, organized or unorganized, within
the Indian gaming industry.
We have listened as a committee, and I think Senator McCain
and Senator Inouye have listened as individuals and members of
a committee, to this for 20 years. And, interestingly enough, it has
all been more a matter of press speculation than any fact at all.
We have had numerous hearings on this issue, and the fact re-
mains that Indian gaming may be better situated than their com-
petitors in non-Indian gaming in terms of their historical involve-
ment and their current problems with criminal activity — again, or-
ganized or unorganized.
So I think this is an important hearing. I think Senator Inouye
has pointed out that this is a difficult tightrope. We have to recog-
nize the rights of these Indian sovereign nations. That rubs many
people the wrong way, but it is a fact of American history that that
is what these tribal lands are, and they, in fact, have certain^ rights
under the laws and the treaties of this country, and it doesn't mat-
ter whether or not you make application for Federal recognition
today or you made application 50 years ago.
That process puts you through the most rigorous examination of
your anthropological backgrounds and your cultural heritage and
your history beyond recognition. In fact, the argument of most peo-
ple is that the process doesn't work because it is almost impossible
for anybody to get through that process in today's world.
So I think we have got to separate a number of different issues
here. Some people don't like Indian sovereignty at all. It simply
rubs them the wrong way that there are rights that are accorded
to the Indian nations of this country. Other people don't like com-
petition from what now has become successful gambling on Indian
reservations. And other people just don't want to hear about this
problem.
Those are all interesting camps, but they have got to be sorted
out in this process, and we cannot, because of the concerns that
people have with Indian gaming from a competitive point of view
or from a chauvinistic point of view, or from whatever point of
view, we cannot then use that to trample on the rights of these In-
89
dian nations, and recognizing that these are most difficult ques-
tions.
Senator McCain's State has gone through a torturous process,
but finally, when everybody got engaged and started working to-
ward a solution, they worked toward a solution that has the agree-
ment of both the State and the Indian nations and the Federal
Government, and the fact is that that is happening throughout the
country. It doesn't mean that they are all the same, it doesn't mean
that there are not hard cases, because clearly there are.
As Congresswoman Roukema points out, urban areas are tougher
than rural areas, but the Indian nations and their treaties and our
Government didn't ascribe to them a different set of rights because
they would eventually end up a hundred years later in an urban
area. But we have got to go through the process of sorting that out.
I come from a State that has never legally allowed slot machines
in its State, and we are terribly concerned that Indian gaming can
drive the process of the State having to accept slot machines.
So everybody has these concerns, but we have got to work them
out, not based upon rumor and innuendo and wild accusations, we
have got to work them out based upon the facts, and I hope that
this hearing will proceed along that process, and I will wait my
turn for questioning because other Members arrived ahead of me.
Thank you, Mr. Chairman.
[Prepared statement of Mr. Miller follows:]
90
8TATEKEMT 07 CHAZRMAH QEORGB MILLER
OVERSIGHT INCIAH OAMIMa
SUBCOMMITTEE OM NATIVE AMERICAH AP7XIRS
OCTOBER S, 1993
After much debate, research and compromise Congress enacted the
Indian Gaming Regulatory Act in 1988. The purpose of the Act was
to regulate gaming on Indian lands. The Act allowed that Class One
games which consist of traditional Indian games be regulated by the
tribe. Class Two games which consist of bingo, pull tabs, and
lotto would be regulated by the tribe in conjunction with the
Federal Indian Gaming Commission. Class Three games such as table
games and slot machines would be regulated pursuant to a compact
between the tribes and the states.
Indian gaming is governmental gaming and as such, all proceeds are
mandated by law to go back to the tribal government. On one
reservation in Minnesota I had the opportunity to visit a new
health care facility, a child care center with 24 hour supervision
for children whose parents have to work a midnight shift, a new
school, and a new, safe, water tower - all constructed with gaming
proceeds. These dollars are turned immediately into "quality of
life" opportunities for Indian children so that they cem have some
of the benifits that non Indian children take for granted.
I'm sure that what New Jersey and Nevada do for their citizens with
the casino taxes they receive are very important to the residents
of those states. New Jersey can be proud of the fact that senior
91
2
citizens pay only $5.00 per prescription with the aloost 7% of
gross casino proceeds that go to the State. Imagine how much good
New Jersey and Nevada could do with 100% of proceeds from gaming!
This is the case on Indian reservations where all the money serves
to better the community.
Indian geuning is incredibly small compared to privat* for-profit
casinos and lotteries. When put up against all foms of legalized
gaming, Indian gaming in 1992 is a mere 5% . That's all - 5t -
with all the recent news articles and publicity against Indian
gaming you'd think Indian geaing was <Q>out to topple Las Vegas and
shove Atlantic City right into the oce<m!
But that 5% is of vital importance to ailing Indian communities.
Gaming is the first opportunity in ages for many Indian tribes to
promote economic development and raise their standard of living.
Not all tribes are interested in gaming, but for those that are it
can mean the difference between their tribal members living in
squalor with no chance of getting out and having the means to
better feed, house, and educate their members.
It is absurd and quite naive to think that an Indian tribe would
risk all of this by engaging in business practices with someone of
questionable background. Indian tribes have a vested interest in
ensuring that Indiem qaminq is free from corruption and that the
benefits of gaming reach the tribal members.
92
3
The hearing this morning will focus on lav enforcement issues as
they affect Indian gaming. To those who say that Indian geuning is
not regulated - I say - LOOK AT THE FACTS. Indian gaming is
regulated and supervised by FIVE authorities:
1. FBI and the Justice Department have the responsibility to work
with the National Indian Gaming Commission in conducting background
checks on persons wishing to enter into business with a gaming
tribe. The FBI also follows all leads regarding organized crime
figures who might attempt to infiltrate Indian gaming. Violators
are prosecuted by the U.S. Attorney in Federal Court.
2. The National Indian Gaming Coonission which was authorized by
the Indian Gaming Regulatory Act, is responsible for regulating all
Class Two games as well as conducting background checks on persons
wishing to contract with Indian tribes for Class Two or Three
gaming activities. Management contracts are subject to intense
scrutiny by the Commission prior to approval.
3. States - Through Class Three compacts with Indi<m tribes, states
are free to exercise as much or as little authority as is mutually
agreed upon.
4. Department of the Interior - The Secretary of the Interior must
approve ALL gaming compacts between tribes and states. The BIA
93
4
maintains a general trust responsibility to provide civil
regulation and criminal law enforcement on reservations.
5. Indian Tribes. Tribes are governments much ii]ce states and have
the governmental responsibility to make sure that the games are
properly regulated, operated cleanly, and fairly with the best
return to the tribe. Indian tribes take these governmental
responsibilities as seriously as any state.
This Committee has dedicated Itself to finding out what aspects of
the Indian Gaming Regulatory Act are working, what aspects are not
working, and what needs to be adjusted. Chairman Richardson has
conducted exhaustive research and previously held 4 oversight
hearings on different aspects of gaming already this year. If
something is broken and Indian tribes are vulnerable to unsavory
characters then this Committee will fix it. Let me assure you - I
will not sit idly by and watch organized crime Infiltrate Indian
gaming as has been alleged by some. What this Committee will NOT
do is foist gratuitous state jurisdiction upon tribes which have no
merit just to say we did something. Nor will this Committee allow
itself to b« used unquestioning as a sounding board for those whose
only concern is the fear of competition.
I look forward to hearing the testimony and from all the witnesses
today and engaging in helpful dialogue.
94
Mr. Richardson. I thank the chairman.
Do any of my colleagues on the minority side have any questions
for this panel?
The gentleman from Wyoming.
Mr. Thomas. Just very briefly.
Obviously, there are two points of view about State regulations.
Senators, either of you, how do you deal with the notion that if
a State allows gambling in their own State and has a regulatory
body, do you think the tribal activities are adequately regulated, or
why shouldn't the same regulations and controls apply?
Senator INOUYE. Under the Indian Gaming Regulatory Act of
1988, if a State does not criminally prohibit gaming activities, then
a federally recognized tribe living on trust lands can enter into ne-
gotiations and discussions with the State government with the aim
of entering into a compact to establish games. A compact, obvi-
ously, assumes that there would be negotiations.
A State may not get everything it wants, the Indians may not
get everything they want, and, obviously, in a compact, if I were
the State governor or the attorney general, I would insist that
these games should be regulated in a way similar to that carried
out in the State.
As to the gentlelad/s concern in New Jersey, if I may most re-
spectfully suggest, the Gaming Act says that those lands that were
in trust at the time of the enactment would be those lands that
may be used for such gaming purposes.
If the Indian people in New Jersey are still not recognized — and
apparently they don't have any reservation — then they would seem
to be outside the law.
Secondly, assuming that they are recognized at some later date,
if such lands are going to be placed in trust for the purpose of gam-
ing and if those lands are located off the tribe's reservation, the
Secretary must so approve, with the concurrence of the State gov-
ernor, and so it would seem inconceivable that the State of New
Jersey, listening to the desires of her constituents, would say,
"Okay, Indians, go ahead and have gaming in this district." So I
think the law is rather clear in this respect.
The thing that is very difficult for most Americans to appreciate
and understand, I think, was very clearly stated by Chairman Mil-
ler, and that is the concept of sovereignty. There are many levels
of sovereignty, as we are all aware. The states delegated certain
powers and authorities to the Federal Grovemment. The States also
delegated some authorities to the counties and cities.
We have other sovereign entities in the United States; embassy
grounds, for example. And Indians are sovereign, but in the area
of gaming, it depends upon the arrangement they have made with
the State Government and the Federal Government.
Some sovereign Indian nations could arrest me if I went speeding
through their jurisdiction. Some would call upon the State police to
do that job. But the courts have consistently recognized that there
is this sovereign aspect to Indian tribal governments, and this rec-
ognition must be honored by the Congress of the United States un-
less we are willing to, well, amend the Constitution of the United
States, repeal all of the hundreds of laws that we have passed since
our founding, and I can't see that happening.
95
But, as Senator McCain has pointed out, in all of these 72 com-
pacts, we are still to hear from the FBI that there exists organized
crime or criminal elements involved in such activities. So I take the
word of the FBI, and I believe that they have done a good job.
Senator McCain. Mr. Chairman, could I just add one additional
comment?
Mr. Richardson. Sure.
Senator McCain. When we passed the Indian Gaming Regu-
latory Act, the provisions of the Act called for the setting up an In-
dian Gaming Commission, which is one of the later witnesses here
this morning. That Indian Gaming Commission was given the au-
thority to set regulations, enforcement, et cetera.
Now, in all candor. Congressman Thomas, the last administra-
tion was very slow in implementing this Act, in appointing mem-
bers of the commission, and getting this whole system up to speed,
and, because of that, I think that there were some problems, and
some problems may still exist.
But if you passed a law today that said that the Indian tribes
who engage in Indian gaming operations are now under State regu-
lation, it would be 24 hours, in my view, before that would be
thrown out in court because of the constitutionality of it.
The State does not have the right to regulate Indian tribes be-
cause of the sovereign basis of our recognition of the Indian tribes,
and I believe that if there is a problem with the Indian Gaming
Commission in their enforcement and their regulation, I would look
towards beefing them up, making sure they are doing their job,
rather than taking an approach which I think would be viewed by
the courts as unconstitutional.
Mr. Thomas. Thank you. It is true, however, that some States,
through their compact, the tribes have agreed to State regulation.
Mr. Richardson. I thank my colleague.
Let me remind my colleagues that we have five panels for this
hearing, and I would hope that we could move ahead.
The gentleman from Hawaii.
Mr. Abercrombie. Just a couple of points I want to make certain
that I understand.
Mr. Hughes, on page 3 of your testimony at the bottom, you
speak about protecting the integrity of any gaming operation and
assuring that it does not put other State-regulated interests at a
competitive disadvantage. You go on, on page 4, to talk about any
gaming operation receiving the same level of regulatory scrutiny.
Following up on what Senator McCain said, wouldn't this simply
be a question of the kind of compact that was arrived at between
the Indian nation and the regulatory agency under existing State
law in whatever State it was in. New Jersey or otherwise?
Mr. Hughes. Well, that would be the case if, in fact, there is a
compact that is negotiated. But there is a process, as you know,
that if the State and Native American interest cannot reach accom-
modation, there is a process for the Commission to approve, after
a mediation process, a compact so it went into effect.
But what I am saying is that there is an overriding public inter-
est in ensuring that we have effective regulation and enforcement
in place.
Mr. Abercrombie. I understand that.
96
Mr. Hughes. And that is an overriding interest.
Mr. Abercrombie. I understand that. But am I correct then in
saying that there is a process, which perhaps you may think may
be improved in legislation here — nonetheless, there is a process
whereby, in the compact negotiation, a conclusion can be reached
as to how the regulations and the supervision will take place?
Mr. Hughes. I can give you a scenario where that is not assured.
For instance, if in fact there is disagreement, which there often is,
between a State and the Indian tribes negotiating the compact and
the mediator recommends — let's say the Indian tribe doesn't have
in place in the enforcement section the same type of enforcement
and regulatory mechanisms in that State or required by that State,
if there is to be Indian gaming, you wouldn't have a guarantee that
we would have that kind of enforcement.
Mr. Abercrombie. Is it your suggestion then that that kind of
assurance be built into any changes in the law?
Mr. Hughes. That is the point I am making. That is an over-
riding public concern. In New Jersey, as I indicated, W3 spend over
$50 million in enforcement and regulation, and we still have a very
difficult time at times trying to prevent money laundering activi-
ties, for instance.
Mr. Abercrombie. That brings me to the point here. It seems
there is a bit of a straw figure being beaten on here. I am not so
certain that the history of State-regulated gambling in this country
has been unfettered by accusations of criminal activity, and to sud-
denly bring it up with respect — or to bring it up with emphasis
with respect to Indians, it seems to me, is a little bit condescend-
ing, patronizing, or even racist in its connotation.
So it seems to me that what you are suggesting here is a per-
fectly sound and reasonable approach, that we examine the exist-
ing law to see whether or not we can make some changes here that
will allow the Indian nations the same opportunities to have super-
vision and regulation, which will assure the tribal members that
they are being protected, just as any other individual or group
should be able to feel that they are being protected with respect to
the attempts of organized criminals or any other group to try and
subvert the intent of the law.
Mr. Hughes. Precisely, that is the point that I make. I think
that the enforcement and the supervisory regulatory aspects are
deficient. I thought so in 1988 when I voted against it, because I
did not feel that it would guarantee that we would put in place
those types of protections, protections for the Indian tribes as well
as the non-Indian citizens of a particular State.
Mr. Abercrombie. Thank you. I think your testimony is very
well taken. I think your approach is good.
Finally then, Mr. Chairman, from what I see so far in looking at
the rest of the testimony and some of the other information, it
seems to me the principal worry here is, they are afraid for once
the Indians are going to be able to compete. I thought competition
was the big deal here. If that is the case, then it seems to me this
is the Indians' version of NAFTA for gambling. Let them compete.
If you are afraid to compete against the Indians and the tribal
nations, that is your problem, not the tribes'.
Mr. Richardson. The chair thanks the gentleman.
97
Mr. Abercrombie. Thank you. I appreciate the opportunity for
some editorial comment, Mr. Chairman.
Mr. Richardson. The chair recognizes the chairman of the com-
mittee.
Mr. Miller. Thank you.
Hopefully, when this hearing is done, as I said, we will separate
out a lot of different issues. I think that the notion is out there that
this is a willy-nilly decision: A group of Indians get together, they
get themselves recognized, and they get some investors, and they
have a casino, and they are on their way. And nothing could be fur-
ther from the truth. Either whether they go through the Federal
recognition process and if they are successful there, if they have
not been recognized to date, can they establish a land base? Can
their land base, as Senator Inouye pointed out, be established for
this purpose? And whether or not they have worked out an agree-
ment with the governor and the Secretary of the Interior, which
would be highly unlikely to be approved if they did not agree to
that.
Not only that, also what needs to be separated out here is really
the rather incredible oversight of Indian gaming that exists in this
country today by virtue of State compacts. If you look at your
neighbor there, Connecticut, in the State agreement they have
mandatory licensure for all of their employees, they have agreed to
all the Federal regulatory oversight, they have mandatory regu-
latory oversight during all hours of operation, on-site police pres-
ence during all hours of operation, liquor control agents on site in
all hours of operations, exhaustive State background checks of all
casino executives, mandatory yearly audit by outside auditing
firms, and then they have got to go through the Federal process,
which is all the memorandums of understanding that I believe now
exist between the FBI and the BIA for background checks; for the
Indian commission's approval of these management contract, back-
ground checks of all of the parties to that; and it goes on and on
and on. Many of these, in fact, don't exist in New Jersey or Nevada
where gambling is a much larger operation.
So I think we have got to calm this thing down a bit and under-
stand what the real process is for this process to take place and
how extensively regulated it is, and that the Commission has the
ability to assess these operations, and at any time it thinks that
it does not have the adequate funding or oversight to go through
this, it has the ability to assess this and to beef up that regulatory
process.
I want to thank my colleagues for their testimony.
Senator McCain. Chairman Miller, could I make one additional
comment to your statement which I think is important?
Mr. Miller. Certainly, Senator.
Senator McCain. In the very long and detailed and many times
agonizing negotiations that the chairman and I have had with the
governors and the attorneys general, the issue that we are hung up
on has nothing to do with enforcement of gaming, it has nothing
to do with the problem of infiltration of organized crime. The one
remaining problem we face in our negotiations with the governors
is the issue of scope of gaming.
98
So I would suggest, Mr. Chairman, that your words are correct
in that the governors and the attorneys general do not raise this
alarm that seems to have been raised here at this hearing and in
other parts of America.
Mr. Miller. Congressman Hughes, just for a second here, on
that point, I think the concern of the governors here, you and I
have spent an incredible number of hours discussing this issue and
the concerns that would be raised in your State and your region,
because I think, as Congresswoman Roukema points out, what hap-
pens in this region with this population density is obviously of
great concern.
My understanding — and correct me if I am wrong — is that New
Jersey has not really participated in the discussions that Senator
Inouye referred to earlier, that they have opted out of those discus-
sions. Is that correct?
Mr. Hughes. I think that is essentially correct, except that I
know that Bob Del Tuso, when he was attorney general, I believe,
was privy to much of the discussions that were taking place. So
they monitored; i don't think they took the lead.
Mr. Miller. If you might check on that, because my understand-
ing is that their position is no Indian gaming, and so they are not
part of this. But I think that is not going to become the law of the
land, and this process is going to remain in place, maybe with some
technical changes and what-have-you, and this is being worked on.
It would seem to us if this particular issue has not been raised
to a great extent in those discussions and yet New Jersey feels that
this is an important issue. New Jersey, it seems to me, should be
participating in those discussions so that they can weigh in on
that.
I mean what we are trying to do is to get the attorneys general
and the governors together to let's find out what concerns are real
and what concerns aren't or a misreading or a misunderstanding
of the laws or what the law doesn't address, and it would seem to
me that New Jersey, that feels it has so much at stake, would do
well to get involved in that process instead of coming back at the
end and saying, "Well, we don't accept this," or, you know, "This
has got to be redone." They should get into the front door here.
Mr. Hughes. Well, I agree with that. But my understanding —
and I will double-check it — is that our State has been privy to the
negotiations. They have not taken a lead in those negotiations, but
they certainly do have a vital interest in these issues, including
scope of play, which is a problem because of vague definitions with-
in the Act which we are going to have to address, in my judgment.
And the negotiating process, my State obviously has to have a
decided interest in that. And in the regulatory side, obviously they
have a decided interest, as I have indicated, because of the poten-
tial economic disadvantage it would put States like New Jersey if,
in fact, we don't play by the same level playing field.
Mr. Miller. Well, if you would check that out, I would appre-
ciate it.
Mr. Chairman, finally, let me just say that I am told that in the
entire history of the recognition process only nine out of 120 tribes
that have sought recognition have ever been recognized under rec-
ognition process, and, I think in the one that we just did legisla-
99
tively, conditions were placed upon the recognition for the purposes
of gaming which I think limited it only to bingo, and that was by
agreement of the tribe and the State in South Carolina that that
would be the condition of the recognition. So this is not a free and
open process by which you just show up with a casino.
Mrs. ROUKEMA. Mr. Chairman, may I interject something here?
There has been reference, at least two or three references, to our
particular situation, and now Mr. Miller has again referred to the
recognition, the conditions under which recognition are given.
I think the point is that there is no clarity under the law as to
what can be permitted once a tribe achieves recognition. There is
no reason to be hiring high-paid, multi-million-dollar lobbyists in
Washington if this tribe simply wants local recognition for no other
purpose but to automatically qualify for casino gambling. Now that
certainly is the legal understanding, or legal interpretation that we
have had now.
Mr. Miller. They can't get recognition that way. They can get
recognition
Mrs. RouKEMA. No, I am not talking about how they get recogni-
tion but once recognized
Mr. Miller. That is right. Once you are an Indian nation, you
are an Indian nation, and you have all the rights and responsibil-
ities of that nation.
Mrs. Roukema. Exactly, and they would then qualify
Mr. Miller. But if they, in fact, can provide adl of the evidence
as to the recognition
Mrs. Roukema. Oh, exactly.
Mr. Miller. You wouldn't say that they are not entitled to be
recognized?
Mrs. Roukema. No, I am not saying that, not at all. But I am
saying with reference to a statement that was made earlier that no
tribe who would be recognized after the law could then retro-
actively gain the right to Indian gambling. There was a reference
made here earlier to that question, and I am saying that this
Ramapough group, if — once recognized, will automatically qualify.
Mr. Miller. That is their theory.
Mrs. Roukema. Pardon me?
Mr. Miller. That is their theory. I don't know if that is factual.
I appreciate what they are sajdng,
Mrs. Roukema. Yes.
May I make another point, because I think it is not specific to
the question of criminal activity, but it is specific to the question
of under what circumstances there should be recognition and how
you qualify for gambling.
There is another situation in my district where there is a group
that wants to invite a Delaware tribe from Oklahoma to relocate
in Sussex County, New Jersey, and then they will qualify for In-
dian gambling.
Mr. Miller. I hope their attorneys are earning a lot of money,
because they have got an impossible case.
Mrs. Roukema. I hope so, too. But you can see how things have
gotten pretty far out of hand.
Mr. Abercrombie. Mr. Chairman.
100
Mr. Richardson. The chair recognizes the gentleman from Ha-
waii for one minute.
Mr. Abercrombie. Less than one minute.
Mr. Chairman, before we go any further, I don't know if it is a
point of order, but allegations are flying back and forth here about
what the intentions are of a group called the Ramapough, and as
far as I can see on the witness list they don't appear here, and I
would just request that before we accept as gospel what the inten-
tions of any particular individual or group are, they at least be
given an opportunity to state for themselves what their intentions
are or are not now.
If there are a group of people, a community, now engaged in the
process of attempting to achieve tribal status through the processes
that we have established, that is one thing, but, from my point of
view, I don't accept the idea that someone else can speak for them
as to what their intentions are.
Mr. Richardson. Let me just state that the record will be open
for two weeks in the hearing.
Let me thank your distinguished witnesses for being so patient
and helpful. Let me mention, too, that all of you are welcome to
join the panel as we move ahead in this hearing. I want thank the
distinguished witnesses.
PANEL CONSISTING OF JIM E. MOODY, SECTION CHIEF, ORGA-
NIZED CRIME/DRUG OPERATIONS, CRIMINAL INVESTIGA-
TIVE DIVISION, FEDERAL BUREAU OF INVESTIGATION; LAU-
RENCE A. URGENSON, ACTING DEPUTY ASSISTANT ATTOR-
NEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF
JUSTICE; DAVID B. PALMER, DEPUTY ASSISTANT COMMIS-
SIONER FOR CRIMINAL INVESTIGATION, INTERNAL REVE-
NUE SERVICE, ACCOMPANIED BY PETER G. DJINIS, DIREC-
TOR, OFFICE OF FINANCIAL MANAGEMENT, DEPARTMENT
OF THE TREASURY
Mr. Richardson. Now we move on to panel number two: Mr. Jim
E. Moody, section chief. Organized Crime/Drug Operations, from
the FBI; Mr. Laurence Urgenson, acting deputy assistant attorney
general. Criminal Division, Department of Justice; David Palmer,
deputy assistant commissioner for criminal investigation, IRS, ac-
companied by Mr. John Monaco, assistant commissioner for exam-
ination, IRS; and Mr. Peter Djinis, director, Office of Financial
Management, U.S. Department of the Treasury.
I would ask that the hearing come to some reasonable order and
that we move ahead with our first panel.
Gentlemen, let me welcome you to the subcommittee. As is the
custom, your full statements will be submitted in the record, and
we ask that you summarize your statement. The little light will be
exercised. When you see the yellow light, it means that your five
minutes are fast approaching. When you see the red light, we ask
you to wrap up. So, again, thank you for coming.
We will start first with Mr. Jim Moody.
Let me also mention that our distinguished colleague from New
Jersey, Bob Torricelli, has joined the panel, and he will be intro-
ducing our next witness.
101
I wonder if the gentleman from New Jersey wished to say any-
thing at this time.
Mr. TORRICELLI. Mr. Chairman, only to thank you for holding
these hearings.
As 49 governors have requested and the President of the United
States has commented upon, there is a responsibility in this Con-
gress to deal with the complexities confronted by Indian gaming.
Your hearing today is an important beginning in that process,
which I hope will take us to rectifying whatever problems we find
during the process of these discussions.
In any case, I thank you for having these hearings and for allow-
ing me to participate.
Mr. Richardson. I thank the gentleman.
Mr. Moody, please proceed.
STATEMENT OF JIM E. MOODY
Mr. Moody. Good morning, Mr. Chairman.
My name is Jim Moody. I am the section chief for the Organized
Crime/Drug Operation Section for the Federal Bureau of Investiga-
tion. As such, my section is responsible for the FBI investigations
of organized criminal enterprises such as the American La Cosa
Nostra, Asian, and European organized crime groups. This section
is also responsible for Italian organized crime groups such as the
Sicilian Mafia Camorra and 'Ndrangheta.
I am pleased to appear here this morning to assist you and to
discuss some of the law enforcement issues relative to the Indian
Gaming Regulatory Act.
Organized crime is in the business of making money. They are
motivated by greed and are consistently and constantly seeking
ways to generate both legal and illegal monies from legal and ille-
gal means. Since the gaming industry is a cash-intensive industry,
those factors of cash and the need to generate legal and illegal
money, coupled with the dynamics of the industry, makes it very
attractive for organized crime to look at any t3T)e of gaming activ-
ity.
We have seen organized crime's involvement in gaming range
from many activities associated with the industry. We have also
heard many more rumors and innuendo than we have been able to
prove over the years.
Most of the discussions of organized crime in the gaming indus-
try seem to center on skimming. Now we define skimming as the
generation of illegal income from a casino generally by the owners
or those managing the casino. Skimming is completely different
than embezzlement which generally involves the employees steal-
ing monies from their employer.
There have been cases where organized crime has been involved
in embezzlement of money from the casinos. There have also been
cases where organized crime has sponsored teams of cheats that
defraud the casinos. But we look at organized crime's infiltration
of the casino in skimming as the most damaging form of organized
crime. This occurs when they are able to control the casino.
Skimming has traditionally been accomplished through the use
of a strawman. A strawman is a person controlled by organized
crime who can undergo the scrutiny of a law enforcement back-
102
ground check and obtain a gaming license. There have been several
strawman-type cases prosecuted in the United States which re-
sulted in convictions of significant organized crime figures.
The strawman technique was used by organized crime on the
Rincon Indian Reservation. This is the only FBI case wherein orga-
nized crime members have been convicted for attempting to control
an Indian gaming establishment.
The FBI has learned over the years that strong regulation of the
gaming industry and of its supporting industries is the best and
most effective means of keeping organized crime out of the indus-
try. Gaming regulations and enforcement are important for protect-
ing Indian gaming because once organized crime gains control or
gains a foothold, it becomes very, very difficult and extremely man-
power intensive to remove organized crime from the casino.
As legalized gambling spreads throughout the United States, we
expect that States with poor regulations and controls may experi-
ence an organized crime influx. We look at the primary responsibil-
ity for the gaming regulation and enforcement as resting with the
State or with the National Indian Gaming Commission. The FBI
becomes involved when organized crime is infiltrating a gaming op-
eration. It is either ongoing or after the fact quite often before we
may hear about it.
Now Indian gaming poses a unique challenge to the National In-
dian Gaming Commission. The FBI has investigative responsibil-
ities on some of the reservations and we have investigative re-
sources fully committed to these Indian reservations, as we have
investigative resources fully committed to organized crime inves-
tigations.
The FBI, however, is not equipped to assume a regulatory or en-
forcement role in Indian gaming. We are willing to provide support
to law enforcement and regulatory agencies that will have respon-
sibility for monitoring Indian gaming, and, due to Federal laws and
procedures, it is much easier for us to cooperate with regulatory
agencies that do have law enforcement authorities than those that
don't. Consequently, we would recommend that regulatory agencies
have such law enforcement authority.
We will, however, continue to monitor the activities of organized
crime, and if we discover organized crime involvement in Indian
gaming, we will take appropriate action, as we have done in the
past.
The gaming industry is a relatively closed industry. Dishonest
employees will be quickly identified and dismissed. Honest man-
agement will identify problem employees long before law enforce-
ment. The vast majority of gaming operations are run as legitimate
legal enterprises. With strict regulation, strong internal control,
strong enforcement, and constant vigilance, organized crime's infil-
tration can be impeded.
This concludes my shortened version of the statement, and I will
be happy tb answer any questions.
[Prepared statement of Mr. Moody follows:]
103
STATEMEirr OF JIM £. MOODY
SECTION CHIEF
ORGANIZED CEUME/DROG OPERATIONS
CRIMINAL INVESTIGATIVE DIVISION
FEDERAL BDREAU OF INVESTIGATION
BEFORE THE
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
COMMITTEE ON NATURAL RESOURCES
UNITED STATES HOUSE OF REPRESENTATIVES
WASHINGTON, D.C.
OCTOBER 5, 1993
104
GOOD MORNING, MR. CHAIRMAN, SUBCOMMITTEE
MEMBERS, AND STAFF. MY NAME IS JIM MOODY AND I AM THE
SECTION CHIEF OF THE ORGANIZED CRIME/DRUG OPERATIONS
SECTION #2 OF THE FEDERAL BUREAU OF INVESTIGATION.
MY SECTION IS RESPONSIBLE FOR THE FBI
INVESTIGATIONS OF ORGANIZED CRIMINAL ENTERPRISES SUCH
AS THE LA COSA NOSTRA, ASIAN AND EUROPEAN ORGANIZED
CRIME GROUPS. THE SECTION IS ALSO RESPONSIBLE FOR
INVESTIGATIONS OF ITALL\N ORGANIZED CRIME GROUPS SUCH
AS THE SICILL\N MAFIA, 'NDRANGHETA AND CAMORRA.
I AM PLEASED TO APPEAR HERE THIS MORNING TO
ASSIST YOU IN YOUR OVERSIGHT FUNCTION AND TO DISCUSS
SOME OF THE LAW ENFORCEMENT ISSUES RELATIVE TO THE
INDIAN GAMING REGULATORY ACT.
BEFORE WE CAN SPECIFICALLY ADDRESS ORGANIZED
CRIME'S INTEREST IN INDIAN GAMING, I THINK IT IS IMPORTANT
TO HAVE AN UNDERSTANDING OF ORGANIZED CRIME.
ORGANIZED CRIME IS IN THE BUSINESS OF MAKING MONEY.
105
THEY ARE MOTIVATED BY GREED AND ARE CONSTANTLY
SEEKING WAYS TO GENERATE WEALTH AND POWER THROUGH
BOTH LEGAL AND ILLEGAL MEANS. ORGANIZED CRIME HAS,
AND WILL CONTINUE TO USE VIOLENCE, INTIMIDATION, FEAR
AND CORRUPTION TO OBTAIN ITS GOALS. THEY CORRUPT
INDIVIDUALS, POLITICAL SYSTEMS AND INSTITUTIONS.
THE GAMING INDUSTRY IS A CASH INTENSIVE
INDUSTRY. THE VAST SUMS OF CASH THAT ARE HANDLED BY
CASINOS RIVAL THAT OF SOME BANKS. THESE FACTORS,
COUPLED WITH ORGANIZED CRIME'S HISTORICAL INVOLVEMENT
IN ILLEGAL GAMBLING, MAKE ANY GAMING ACTIVITY
ATTRACTIVE TO ORGANIZED CRIME. THEY WILL ATTEMPT TO
INFILTRATE ANY OPERATION OR INDUSTRY, NOT JUST GAMING,
THAT THEY BELIEVE IS VULNERABLE.
HISTORICALLY, WE HAVE SEEN ORGANIZED CRIME'S
INVOLVEMENT IN GAMING RANGE FROM CONTROLLING LEGAL
BINGO PARLORS AND "LAS VEGAS NIGHTS" FOR CHARITIES, TO
ILLEGAL NUMBERS OPERATIONS AND INFILTRATING MAJOR
CASINOS AND THEY ARE ALLEGED TO EVEN OWN OFFSHORE
106
CASINOS. ORGANIZED CFxIME HAS ALSO GAINED INFLUENCE BY
CONTROLLING SOME OF THE ANCILLARY SERVICE INDUSTRIES
AND LABOR UNIONS THAT SERVE CASINOS.
MOST DISCUSSIONS OF ORGANIZED CRIME
INFILTRATION IN THE GAMING INDUSTRY SEEM TO CENTER ON
THE ISSUE OF SKIMMING. WE DEFINE SKIMMING AS
GENERATING ILLEGAL INCOME FROM A CASINO BY OWNERS, BY
A CONTROL GROUP OF A CORPORATION, BY CASINO MANAGERS,
OR BY THE OWNERS ON BEHALF OF HIDDEN INTERESTS.
SKIMMING IS DIFFERENT THAN EMBEZZLEMENT, WHICH
INVOLVES EMPLOYEES STEALING MONEY FROM THEIR
EMPLOYER, OR FROM THEFT, WHICH IS AN OUTSIDE PERSON OR
GROUP STEALING FROM THE CASINO WITHOUT THE
KNOWLEDGE OF THE MANAGEMENT. ORGANIZED CRIME HAS
USED ALL OF THESE METHODS TO GET MONEY ILLEGALLY
FROM CASDSIOS.
THERE HAVE BEEN CASES WHERE ORGANIZED CRIME
MEMBERS AND ASSOCIATES HAVE BEEN INVOLVED IN THE
EMBEZZLEMENT OF MONEY FROM CASINOS BY WORKING IN
107
CONCERT WITH EMPLOYEES TO CHEAT AT CASINO GAMES.
THERE HAVE ALSO BEEN ORGANIZED CRIME SPONSORED
TEAMS OF CHEATS THAT HAVE GONE INTO CASINOS TO
DEFRAUD THE CASINOS WITHOUT THE INVOLVEMENT OF
CASINO EMPLOYEES. STRONG INTERNAL CONTROLS BY THE
CASINOS AIDED IN THEIR APPREHENSION.
THE MOST DANGEROUS AND POTENTL\LLY MOST
DAMAGING FORM OF ORGANIZED CRIME INFILTRATION OF
GAMING OCCURS WHEN THEY ARE ABLE TO CONTROL A CASINO
AND/OR ITS SUPPORTING SERVICES. WHOLESALE SKIMMING
FROM A CASINO CANNOT OCCUR WITHOUT MANAGEMENT
INVOLVEMENT.
SKIMMING HAS TRADITIONALLY BEEN ACCOMPLISHED
THROUGH THE USE OF A "STRAWMAN". A "STRAWMAN'' IS A
PERSON CONTROLLED BY ORGANIZED CRIME WHO CAN
UNDERGO THE SCRUTINY OF A LAW ENFORCEMENT
BACKGROUND CHECK AND OBTAIN A GAMING UCENSE.
THERE HAVE BEEN SEVERAL "STRAWMAN "-TYPE
108
CASES PROSECUTED THROUGHOUT THE 1970S AND 1980S. THESE
CASES HAVE RESULTED IN THE CONVICTIONS OF SIGNIFICANT
ORGANIZED CRIME FIGURES AND HAVE DEMONSTRATED THAT
WITHOUT MANAGEMENT'S SUPPORT, LARGE SCALE,
SYSTEMATIC SKIMMING AND MONEY LAUNDERING CANNOT
OCCUR WITHIN A CASINO.
THE "STRAWMAN" TECHNIQUE WAS EVIDENT IN THE
ATTEMPT BY THE CHICAGO ORGANIZED CRIME FAMILY TO
OBTAIN A HIDDEN OWNERSHIP OR CONTROL OF THE GAMING
OPERATIONS ON THE RINCON INDIAN RESERVATION NEAR
SAN DIEGO, CALIFORNL\. THIS IS THE ONLY FBI CASE WHEREIN
ORGANIZED CRIME MEMBERS WERE CONVICTED FOR
ATTEMPTING TO CONTROL AN INDL\N GAMING
ESTABLISHMENT. THIS CASE DEMONSTRATED THE IMPORTANCE
OF INTELLIGENCE AND VIGILANCE IN THE FIGHT TO KEEP
ORGANIZED CRIME OUT OF INDL^N GAMING.
FROM OUR EXPERIENCE, THE FBI HAS LEARNED THAT
STRONG REGULATION OF THE GAMING INDUSTRY, AS A WHOLE,
AND OF ITS SUPPORTING INDUSTRIES IS THE BEST AND MOST
109
EFFECTIVE MEANS OF KEEPING ORGANIZED CRIME OUT OF THE
INDUSTRY. MUCH CAN BE LEARNED FROM THE GAMING
REGULATIONS THAT REGULATE THE NEVADA AND NEW JERSEY
GAMING INDUSTRIES. GAMING REGULATIONS AND
ENFORCEMENT, SIMILAR TO WHAT IS IN PLACE IN NEVADA AND
NEW JERSEY, ARE IMPORTANT FOR PROTECTING INDIAN
GAMING. ONCE ORGANIZED CRIME GAINS A FOOTHOLD, IT
BECOMES VERY DIFFICULT AND EXTREMELY MANPOWER
ESfTENSIVE TO REMOVE THEM.
AS LEGALIZED GAMING SPREADS THROUGHOUT THE
UNITED STATES, WE ARE SEEING THAT THOSE STATES WITH
STRONG REGULATIONS AND ENFORCEMENT ARE NOT
EXPERIENCING AN INFLUX OF ORGANIZED CRIME ACTIVITY.
HOWEVER, WE EXPECT THAT STATES WITH POOR REGULATIONS
AND CONTROLS MAY EXPERIENCE SUCH AN INFLUX.
PRIMARY RESPONSIBILITY FOR GAMING REGULATION
AND ENFORCEMENT RESTS WITH THE STATE OR WITH THE
NATIONAL INDL\N GAMING COMMISSION. THE FBI
TRADITIONALLY BECOMES INVOLVED WHEN ORGANIZED CRIME
no
IS ILLEGALLY INFILTRATING A GAMING OPERATION OR WHEN
THE CRIMINAL ACTIVITY INVOLVES MORE THAN ONE STATE. IN
SOME INSTANCES OF ORGANIZED CRIME INFILTRATION, THE USE
OF FEDERAL STATUTES, SUCH AS RICO OR FEDERAL
ELECTRONIC SURVEILLANCE STATUTES ARE ESSENTL\L FOR
SUCCESSFUL INVESTIGATION AND PROSECUTION.
INDIAN GAMING POSES A UNIQUE CHALLENGE TO
THE NATIONAL INDIAN GAMING COMMISSION. THE FBI HAS
INVESTIGATIVE RESPONSIBILITIES ON SOME RESERVATIONS AND
HAS TRADITIONALLY INVESTIGATED FEDERAL GAMBLING
VIOLATIONS. IN THESE TIMES OF BUDGETARY RESTRAINT, THE
INVESTIGATIVE RESOURCES OF THE FBI ARE FULLY
COMMITTED AND THE FBI IS NOT EQUIPPED TO ASSUME A
REGULATORY OR ENFORCEMENT ROLE IN INDL\N GAMING.
THE FBI IS WILLING TO PROVIDE SUPPORT TO LAW
ENFORCEMENT AND REGULATORY AGENCIES THAT WILL
HAVE THE RESPONSIBILITY OF MONITORING INDL\N GAMING.
DUE TO FEDERAL LAWS AND PROCEDURES, IT IS MUCH EASIER
FOR US TO COOPERATE WITH REGULATORY AGENCIES THAT
Ill
HAVE LAW ENFORCEMENT AUTHORITY THAN THOSE THAT
DON'T. CONSEQUENTLY, WE WOULD RECOMMEND
THAT REGULATORY AGENCIES HAVE SUCH AUTHORITY. WE
WILL, HOWEVER, CONTINUE TO MONITOR THE ACTIVITIES OF
ORGANIZED CRIME AND, IF WE DISCOVER ORGANIZED CRIME
INVOLVEMENT IN INDL\N GAMING, THE FBI WILL TAKE
APPROPRIATE ACTION, AS WE HAVE DONE IN THE PAST.
THE GAMING INDUSTRY IS A RELATIVELY CLOSED
INDUSTRY. THE INDIVIDUALS THAT MANAGE AND OPERATE
CASINOS WILL QUICKLY RECOGNIZE EMBEZZLEMENT OR THEFT
IN THEIR OPERATIONS. DISHONEST EMPLOYEES WILL BE
QUICKLY IDENTIFIED AND DISMISSED IN CASINOS THAT ARE
SUBJECTED TO STRONG REGULATION AND ENFORCEMENT.
HONEST MANAGEMENT WILL IDENTIFY PROBLEM EMPLOYEES
LONG BEFORE LAW ENFORCEMENT. THE VAST MAJORITY
OF GAMING OPERATIONS ARE RUN AS LEGITIMATE LEGAL
BUSINESSES. THE GAMING INDUSTRY IS VERY IMAGE
CONSCIOUS, PROFIT DRIVEN, AND HAS A VESTED INTEREST IN
ENSURING THAT THE CRIMINAL ELEMENT IS KEPT OUT OF THE
112
INDUSTRY. WITH STRICT REGULATION, STRONG INTERNAL
CONTROL, STRONG ENFORCEMENT AND CONSTANT VIGILANCE,
ORGANIZED CRIMES INFILTRATION CAN BE IMPEDED.
TfflS CONCLUDES MY OPENING STATEMENT AND I
WILL BE HAPPY TO ANSWER ANY QUESTIONS.
113
Mr. Richardson. I thank the gentleman.
The chair recognizes Mr. Laurence Urgenson, acting deputy as-
sistant attorney general, Criminal Division, Department of Justice,
and I would ask the gentleman from Hawaii to temporarily chair.
STATEMENT OF LAURENCE A. URGENSON
Mr. Urgenson. Mr. Chairman, members of the subcommittee,
good morning. My name is Larry Urgenson. I am an acting deputy
assistant attorney general in the Criminal Division of the Depart-
ment of Justice. I am happy to be here today to testify concerning
the important issue of Indian gaming.
As you well know, for several years Congress labored to develop
legislation that would accommodate the conflicting interests of law
enforcement agencies, opponents of Indian gaming, champions of
Tribal sovereignty, and those who saw gaming as a solution to the
enormous economic problems of the Native American tribes. The
result of that labor was the enactment of the Indian Gaming Regu-
latory Act in October 1988.
The congressional findings and policies explicitly set forth in the
Act and implicit in its regulatory scheme are strongly supportive
of the Native American tribes' need and right to conduct gaming
while recognizing the need for regulation and the prevention of in-
filtration by organized crime.
The Department of Justice is dedicated to responding promptly
to serious and flagrant noncompliance with Indian gaming laws.
The Department will utilize its enforcement weapons against oper-
ations conducted without tribal sanctions or where there is evi-
dence of organized crime infiltration, skimming, or other forms of
crime.
Although we have successfully prosecuted certain instances of
criminal activity in connection with gaming on Indian lands, I em-
phasize that the belief held by some that Indian gaming operations
are rife with serious criminality is not established by the data cur-
rently available.
The Department of Justice believes that to date there has not
been widespread or successful effort by organized crime to infiltrate
Indian gaming operations. For several years, the FBI has focused
its efforts on monitoring these organizations and their associates so
that they will be apprehended if they engage in illegal activity or
attempt to infiltrate legitimate enterprises. Because monitoring
these families is one of the FBI's highest priorities, I am confident
that any evidence of Federal crime that may be developed will be
fully investigated and referred to the United States Attorneys for
appropriate action.
Similarly, there has been little evidence of illegal activity com-
niitted by criminal elements not associated with the major orga-
nized crime families. Again, on those occasions when such allega-
tions have been brought to our attention, they have been inves-
tigated, and when sufficient evidence was developed for conviction,
\ve have not hesitated to prosecute. Two examples are our prosecu-
tion of a Native American official who skimmed the receipts of a
tribe's bingo hall and the prosecution of persons who looted and
burned a New York casino. There are a handful of investigations
into allegations of similar misconduct now being conducted.
114
Finally, there are instances of illegal gaming in Indian country.
These instances include regulatory violations stemming from gam-
ing conducted by tribes on Indian lands and gaming that is con-
ducted on Indian lands but not by Native American tribes.
Gaming that is not operated under tribal auspices cannot be
legal under any circumstances. I believe that all operations in this
category have been shut down.
However, even certain gaming activity conducted under tribal
auspices may be illegal. The Indian Gaming Regulatory Act estab-
lished the regulatory framework for this gaming and provides dif-
ferent requirements for games separated into three classes. Class
I, social gaming, is solely regulated by the tribes. Class II gaming
requires administrative approval of management contracts and
tribal gaming ordinances. The National Indian Gaming Commis-
sion has oversight responsibilities with respect to the Class II re-
quirements.
The principal category of gaming characterized as illegal consists
of those games which arguably, but not clearly, are Class III games
and which are conducted without a compact negotiated between the
State and tribe as required under the Gaming Act.
In some cases, the gaming classification is in dispute because of
the tribe's claim that the game properly falls in Class II and re-
quires no compact.
The final gaming definitions which have been issued by the Com-
mission should give greater certainty to the gaming classification.
Nevertheless, some classification issues remain in dispute.
There are many possible sources for confusion and frustration for
law enforcement when Class III gaming is at issue. In some in-
stances of clear, admitted Class III gaming, a State may change its
law to permit previously forbidden games, thus obligating the
States to enter into compact negotiations they were once able to
refuse. A tribe may be conducting Class III gaming without a com-
pact, but the State and tribe may be in the course of negotiations
that may result in a compact that allows the games. A State may
have negotiated the inclusion of certain games in a compact but
has declined to include certain other games or has placed limits on
them. The prosecutor is then uncertain whether the tribe will dis-
continue the games or file suit under the Gaming Act.
A tribe may be conducting gaming without a compact but has
filed suit against the State because the compact negotiation process
has reached an impasse. A related complication is that some States
have successfully blocked these tribal suits by invoking the immu-
nities of the 10th and 11th amendments.
Under these circumstances, the United States Attorneys are
faced with difficult decisions. It can be hard to justify the expendi-
ture of resources for those alleged violations which are in the proc-
ess of resolution and which, under the Gaming Act, may eventually
be validated by actions of the Commission, the State, or the courts.
In sum, the current record does not support the argument that
there is widespread infiltration of organized crime into gaming on
Indian reservations. However, there is gaming of disputable legal-
ity, some of which will eventually come into compliance with the
Gaming Act after negotiations between the tribe and the State.
115
If the tribes and States continue to negotiate in good faith under
the published regulations of the Commission, there will be far
fewer regulatory violations. We will continue to be diligent in this
area. The Department has repeatedly warned that the flow of cur-
rency through Indian casinos requires vigilance to avert illegal ac-
tivities such as embezzlement, fraud, money laundering, as well as
to protect the tribes' interests. Strict compliance with the scheme
of regulation ordained by Congress is of utmost importance.
Mr. Chairman, this concludes my statement. I will be happy to
answer any questions that the subcommittee may have.
[Prepared statement of Mr. Urgenson follows:]
116
IBtpnxtmtnt of Sns^titt
STATEMENT
OF
LAURENCE A. URGENSON
ACTING DEPUTY ASSIST/U^T ATTORNEY GENERAL
CRIMINAL DIVISION
BEFORE THE
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
COMMITTEE ON NATURAL RESOURCES
UNITED STATES HOUSE OF REPRESENTATIVES
CONCERNING
THE OVERSIGHT OF THE INDIAN GAMING REGULATORY ACT
ON
OCTOBER 5, 1993
117
Mr. Chairman and Members of the Subcommittee —
Good Morning. My name is Larry Urgenson. I am an Acting
Deputy Assistant Attorney General in the Criminal Division of the
Department of Justice.
I am happy to be here today to testify concerning the
important issue of Indian gaming. As the agency responsible for
the enforcement of criminal violations of federal gambling laws,
and in particular, the Indian Gaming Regulatory Act (IGRA) , the
Department has a keen interest in the compliance with Indian
gaming laws. As you well know, for several years Congress
labored to develop legislation that would accommodate the
conflicting interests of law enforcement agencies,
opponents of Indian gaming, champions of tribal sovereignty and
those who saw gaming as a solution; to the enormous economic
problems of the Native American tribes. The result of that labor
was the enactment of the Indian Gaming Regulatory Act in October
1988.
The congressional findings and policies explicitly set forth
in IGRA, and implicit in its regulatory scheme, are strongly
supportive of the Native American tribes need and right to
conduct gaming while recognizing the need for regulation and
prevention of the infiltration by organized crime.
118
2
The Department of Justice is dedicated to responding
promptly to serious and flagrant non-compliance with Indian
gaming laws. The Department will utilize its enforcement weapons
against operations conducted without tribal sanctions, or where
there is evidence of organized crime infiltration, skimming or
other forms of crime. 1 cite several recent examples:
* Prosecutions were brought against private entrepreneurs
operating casinos in violation of tribal, state and federal laws
on the St. Regis Mohawk reservation in the Northern District of
New York;
* Casinos operated without tribal authority were closed
down in the District of Montana and the Eastern District of
Oklahoma ;
* A casino operation in the Northern District of
California was closed down when reports of skimming by the
manager, allegedly an associate of organized crime figures, was
investigated;
* In the Southern District of California, an Indian
official who skimmed from the tribal gaming establishment he
managed was convicted of embezzlement, and his wife was convicted
of income tax violations; and
* Several members of a New York tribe who, after taking
over a tribal casino from its authorized operators, divided up
the take and then firebombed the facility, were successfully
prosecuted for those offenses.
119
3
Although we have successfully prosecuted certain instances
of criminal activity in connection with gaining on Indian lands, I
emphasize that the belief held by some that Indian gaming
operations are rife with serious criminality is not established
by the data currently available. That belief breaks down into
three assertions: (1) that the tribal games have been infiltrated
by organized crime families; (2) that the tribes have been
victimized by criminal elements not associated with the major
crime families; and (3) that the tribes are conducting illegal
gaming.
The Department of Justice believes that to date there has
not been a widespread or successful effort by organized crime to
infiltrate Indian gaming operations. For several years, the FBI
has focussed its efforts on monitoring these organizations and
their associates so that they will be apprehended if they engage
in illegal activity or attempt to infiltrate legitimate
enterprises. One such investigation has revealed an unsuccessful
attempt to infiltrate the gaming operation of the Rincon Band in
California. This investigation resulted in the indictment of ten
men, and the conviction of all but one, on charges of
racketeering, extortion, mail fraud and wire fraud. Moreover,
the FBI now has fewer than five open investigations of organized
crime family activity relating to gaming on Indian lands.
Because monitoring these families is one of the FBI's highest
priorities, I am confident that any evidence of federal crime
120
4
that may develop will be fully investigated and referred to the
United States Attorneys for appropriate action.
Similarly, there has been little evidence of illegal
activity committed by criminal elements not associated with the
major organized crime families. Again, on those occasions when
such allegations have been brought to our attention, they have
been investigated, and when sufficient evidence is developed for
conviction, we have not hesitated to prosecute. Two examples are
our prosecution of a Native American official who skimmed the
receipts of his tribe's bingo hall and the prosecution of persons
who looted and burned a New York casino. There are a handful of
investigations into allegations of similar misconduct now being
conducted .
Finally, there are instances of illegal gaming in Indian
country. These instances include regulatory violations stemming
from gaming conducted by tribes on Indian lands and gaming that
is conducted on Indian lands, but not by Native American tribes.
Gaming that is not operated under tribal auspices, such as the
casinos on Crow and Choctaw lands, cannot be legal under any
circumstances. I believe that all operations in this category
have been shut down.
However, even certain gaming activity conducted under tribal
auspices may be illegal. The Indian Gaming Regulatory Act
121
5
established the regulatory framework for this gaming, and
provides different requirements for games separated into three
classes. Classes I (social) gaming is solely regulated by the
tribes. Class II gaming requires administrative approval of
management contracts and tribal gaming ordinances. The National
Indian Gaming Commission (the Commission) has oversight
responsibilities with respect to the Class II requirements.
The principal category of gaming characterized as illegal
consists of those games which arguably, but not clearly, are
class III games, and which are conducted without a compact
negotiated between the state and tribe, as required by IGRA. In
some cases, the gaming classification is in dispute because the
tribes claim that the game properly falls in class II and
requires no compact. The final gaming definitions, which have
been issued by the Commission, should give greater certainty to
gaming classification. Nevertheless, some classification issues
remain in dispute, although both district and appellate courts
have approved both specific definitions and the Commission's
interpretive approach to IGKA provisions.
There are many possible sources of confusion and frustration
for law enforcement when class III gaming is at issue:
* In some instances of clear, admitted class III gaming,
a state may change its law to permit previously forbidden games.
122
6
thus obligating the states to enter into compact negotiations
they were once able to refuse.
* A tribe may be conducting class III gaming without a
compact, but the state and tribe may be in the course of
negotiations that may result in a compact that allows the games.
* A state has negotiated the inclusion of certain games
in a compact, but has declined to include certain others, or has
placed limits upon them. The prosecutor is then uncertain
whether the tribe will discontinue the games, or file suit under
IGRA.
* A tribe may be conducting gaming without a compact, but
has filed suit against the state because the compact negotiation
process has reached an impasse. A related complication is that
some states have successfully blocked these tribal suits by
invoking the immunities of the 10th and 11th Amendments.
Under these circumstances, United States Attorneys are faced
with the difficult decision of whether to allocate scarce
investigative and prosecutorial resources. It can be hard to
justify the expenditure of resources for these alleged violations
which are in the process of resolution and which, under IGRA, may
eventually be validated by actions of the Commission, the state
or the courts.
Let me give you a few examples of these predicaments:
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* After encouraging the United States Attorney to
announce that she would not tolerate illegal gambling devices on
Montana reservations when there was no compact, the state
Attorney General appealed to his congressional delegation to have
the Congress grant a special six month immunity to violators in
that state.
* In Oklahoma, shortly after the state Attorney General
filed a brief in federal court demonstrating the illegality of
slot machines, the Governor negotiated a compact for their
introduction on to tribal lands. When the tribe later sought to
enjoin the United States Attorney for the Western District from
interfering with their devices, the federal court held, in accord
with the views of both the Attorney General and the United States
Attorney, that the devices were illegal under Oklahoma law and
were not the proper subject of negotiation. The Court of Appeals
for the Tenth Circuit affirmed.
* In Arizona, after state officials made clear that they
would not negotiate with respect to slot machines, the United
States Attorney, through repeated warnings, effected the closure
of seven casinos. Two closed after her final warning and the
others were shut down by seizure of their machines. One
reservation resisted the seizure and, during the ensuing stand-
off, the Governor intervened as mediator.
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8
The Arizona Governor entered into compacts with four of the
tribes. When three of the tribes each made what he considered
imreasonable demands for 2500 machines, he broke off negotiations
and was sued. The court denied the immunity claims and sent the
matter to a mediator who selected the compacts proposed by the
tribes. In response, a special session of the legislature was
called to enact legislation that declared all gaming illegal
except for the state-run lottery and parimutuel horse and dog
racing. (The question will soon be the subject of a state
referendum. )
Finally, the sensitive relationship between the tribes and
the United States Attorneys also inhibits precipitous action.
The federal government has a trust obligation to encourage tribal
self-government and economy. Congress has endorsed gjuning as a
legitimate measure for raising revenue, and the United States
Attorneys are in constant collaboration on other governmental
matters with the tribal officials who are also involved in the
gaming disputes. Given the uncertainty that exists over whether
or not tribes may engage in particular forms of gaming, the risk
of violence attendant upon enforcement of regulatory provisions,
and the nature of federal-tribal relations, the caution federal
prosecutors are exercising in moving against the tribes is
understandable and appropriate.
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9
In sum, the current record does not support the argument
that there is widespread infiltration of organized crime into
gaming on Indian reservations. However, there is gaming of
disputable legality, some of which eventually comes into
compliance with IGRA, after negotiations between the tribe and
state. If the tribes and states continue to negotiate in good
faith under the published regulations of the Commission, there
will be far fewer regulatory violations.
We will continue to be diligent in this area. The
Department of Justice has repeatedly warned that the flow of
currency through Indian casinos requires vigilance to avert
illegal activities such as embezzlement, fraud and money
laundering, as well as to protect the tribes' interests. This
observation is true of non-Indian gaming as well. Strict
compliance with the scheme of regulation ordained by Congress is
of utmost importance to insure the benefits of lawful gaming by
the Indian tribes.
Mr. Chairman, this concludes my statement. I will be glad
to answer any questions from you and other members of the
Subcommittee .
84-760 O - Q4 - R
126
Mr. Richardson. Thank you.
The chair recognizes Mr. David Palmer.
STATEMENT OF DAVID B. PALMER
Mr. Palmer. Thank you very much, Mr. Chairman, good morn-
ing, and members of the subcommittee.
I am David Palmer, the deputy assistant commissioner for the
Criminal Investigation Division of the Internal Revenue Service.
With me today is Mr. Peter Djinis, director of the Office of Finan-
cial Enforcement, Department of the Treasury. The Office of Finan-
cial Enforcement is the office responsible for the Bank Secrecy Act
compliance and enforcement.
We appreciate this opportunity to appear before you today to dis-
cuss current IRS activities involving enforcement of Internal Reve-
nue Code Section 60501 and the Bank Secrecy Act, also known as
the BSA, as they relate to casinos and the Indian gaming industry.
The IRS is strongly committed in its efforts to fight money laun-
dering and to increase compliance with the currency reporting laws
while maintaining an overall effective tax administration program.
Because of the efforts of law enforcement and regulatory compli-
ance functions, money laundering techniques are constantly chang-
ing. Where once we concentrated our efforts on the deposit of large
sums of cash into banks, we now focus our efforts towards less tra-
ditional methods of money laundering such as the use of nonbank
financial institutions, including money transmitters, check cashing
businesses, and casinos.
The Internal Revenue Service has a dual responsibility in its
anti-money-laundering role. IRS, through its Criminal Investiga-
tion Division, has been delegated authority to conduct criminal in-
vestigations relative to financial transactions involving money
laundering activity. This includes the criminal money laundering
offenses of Title 18 and the currency reporting crimes of the BSA,
Title 31, and Internal Revenue Code Section 60501, Title 26.
The IRS Examination Division is responsible for ensuring compli-
ance with the reporting and record-keeping provisions of the BSA
by all financial institutions under its jurisdiction. These include
any financial institution not under the supervision of Federal bank
regulatory agencies or the Securities and Exchange Commission —
basically, all nonbank financial institutions, including casinos, ex-
cept those located in Nevada.
The Examination Division also is responsible for ensuring com-
pliance with Section 60501 which presently applies to all trades or
businesses other than those subject to BSA, including Indian gam-
ing operations.
A database of these required currency reports is maintained by
IRS in the currency and banking retrieval system at our Detroit
Computing Center. This database is used by IRS for civil and
criminal law enforcement and tax administration purposes.
Certain BSA information contained in the database is also dis-
seminated to other Federal and State agencies for law enforcement
and regulatory purposes.
Non-tribal casinos have been subject to the BSA currency report-
ing and record-keeping requirements since 1985. Like other finan-
127
cial institutions, non-tribal casinos must complete a currency re-
porting form, a Currency Transaction Report for Casinos, or a
CTRC, for all currency transactions in excess of $10,000 whether
as a deposit, a withdrawal, an exchange, a redemption or purchase
of chips, receipts from a slot machine payoff, et cetera.
In addition, like the other financial institutions, non-tribal casi-
nos must maintain specific financial records for five years including
payer rating cards maintained by the casino to monitor its cus-
tomers' waging, wins, and losses. The IRS Examination Division
has been delegated the authority to examine these non-tribal casi-
nos for compliance with the BSA requirements.
Pursuant to a 1985 memorandum of agreement with the Depart-
ment of the Treasury, the State Gaming Control Board assumes
regulatory responsibility for casinos located in Nevada. Nevada ca-
sinos file reports similar to the CTRC's directly with the State
Gaming Control Board under State regulatory requirements. These
reports are then forwarded to the IRS for inclusion in the Detroit
computing center database along with the other CTRC's.
Prior to the BSA application to casinos, money laundering activi-
ties occurred involving casinos in a variety of ways, including the
purchase of chips with large amounts of cash and later redeeming
the chips for casino cashiers' checks without any significant gam-
bling. Casinos also have been utilized to exchange narcotics pro-
ceeds in small denomination bills for $100 bills to ease smuggling
cash out of the country.
The currency reporting and record-keeping features of the BSA
have enabled the IRS to utilize the CTRC's and similar documents
to successfully identify and prosecute individuals involved in money
laundering where casinos were involved.
Pursuant to the new Treasury Department regulations effective
March 1, 1994, each casino will have to develop and implement a
BSA compliance program reasonably designed to assure and mon-
itor compliance with the Bank Secrecy Act. These BSA compliance
programs are similar to those imposed on all Federally regulated
banks since 1987 which have proven to be extremely successful.
Section 20(d)(1) of the Indian Gaming Regulatory Act provides
that certain provisions of the Internal Revenue Code, including sec-
tion 60501, shall apply to Indian gaming operations. There is a
technical defect in the Act which says Section 60501 pertains to
gambling winnings. However, Section 60501 applies only to incom-
ing cash and not to cash-out or winnings as indicated by the Act.
Nevertheless, it is our view that Indian tribal casinos are pres-
ently subject to the limited currency reporting requirements under
Section 60501 which pertain to cash received and contain no record-
keeping requirements. In comparison, the BSA mandates a com-
prehensive currency reporting and detailed record-keeping system
with numerous anti-money-laundering safeguards. Section 60501
requires the reporting of receipts of cash in excess of $10,000 on
form 8300, which is the report of cash payments over $10,000 re-
ceived in a trade or business.
The following example illustrates the distinction between a non-
tribal casino required to file a CTRC as compared to an Indian trib-
al casino required to file form 8300.
128
Casino A is a nontribal casino subject to the Bank Secrecy Act.
Casino B is a tribal casino subject to Section 60501. Gambler Doe
walks into Casino A and purchases chips for $15,000 in cash. At
the end of the night, Gambler Doe cashes in his chips, including
winnings, and gets $25,000 in cash.
Casino A is required to file a CTRC which provides identification
information on Gambler Doe and reports both of the transactions,
the cash in a bond entry, the $15,000, and the cash out, a bond de-
parture, the $25,000.
Gambler Doe then enters Casino B and purchases chips in ex-
change for $15,000 in cash. He later departs and cashes in the
chips for $35,000 in cash. Pursuant to Section 60501, Casino B is
only required to provide Gambler Doe's identification and report
only the first half of the transaction, the incoming cash.
Mr. Chairman, based on the IRS and Treasury involvement with
the Indian gaming industry to date, I am providing the following
joint IRS/Treasury recommendation for the subcommittee.
We recommend a statutory amendment to both the Bank Secrecy
Act and the Indian Gaming Regulatory Act to specify that Indian
gaming operations are subject to the Bank Secrecy Act rather than
to Section 60501. The comprehensive nature of the Bank Secrecy
Act would provide additional safeguards to the tribes while provid-
ing law enforcement the paper trail necessary for effective and effi-
cient financial enforcement.
In addition, the IRS and Treasury plan to work jointly with the
Justice Department to coordinate a national Indian gaming con-
ference and will continue the ongoing outreach educational initia-
tives with the Indian gaming industry.
In conclusion, I would like to emphasize that our goal is to
strengthen the cooperative relationships among the Federal agen-
cies working with the Indian gaming industry, and I thank the
subcommittee for its interest in our activities relating to money
laundering enforcement and the Indian gaming industry.
We would be happy to respond to any questions, Mr. Chairman.
[Prepared statement of Mr. Palmer follows:]
129
Statement of
David 6. Palmer
Deputy Assistant Commissioner
(Criminal Investigation)
Internal Revenue Service
Before the
Subcommittee on Native American Affairs
House Committee on Natural Resources
Money Laundering Enforcement and the
Indian Gaming Industry
Octobers. 1993
130
STATEMENT OP
DAVID B. PALMER
DEPUTY ASSISTANT COMMISSIONER (CRIMINAL INVESTIGATION)
INTERNAL REVENUE SERVICE
BEPORE THE
SUBCOMMITTEE ON NATIVE AMERICAN AFPAIRS
HOUSE COMMITTEE ON NATURAL RESOURCES
OCTOBER 5, 1993
Mr. Chairman and Members of the Subcommittee:
With me today is Peter G. Djinis, Director of the Office of
Financial Enforcement, Department of the Treasury. The Office of
Financial Enforcement is the office responsible for Bank Secrecy
Act compliance and enforcement. We appreciate this opportunity
to appear before you today to discuss current IRS activities
involving enforcement of Internal Revenue Code Section 60501
("Section 60501") and the Bank Secrecy Act ( "BSA" ) as they relate
to casinos and the Indian Gaming industry.
More specifically, I hope to provide you with a broader
understanding of what money laundering is and how it can occur in
a casino and the Indian Gaming industry; IRS' role in money
laundering enforcement; and, how Section 60501 and the Bank
Secrecy Act safeguard against money laundering while assisting
the IRS in its anti-money laundering enforcement and tax
administration. The IRS is strongly committed in its efforts to
fight money laundering and to increase compliance with the
currency reporting laws while maintaining an effective overall
tax administration program.
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2
I . INTRODUCTION
Simply put, money laundering is any method used to conceal
or disguise the existence and origin of money generated from
illicit activity, including tax evasion. The objective of those
engaged in money laundering is to move the illicit proceeds into
and through the financial system and then back into the economy
in a form which appears legitimate — the source of which cannot
be traced. Money laundering is executed in three stages: 1)
Placement, 2) Layering, and 3) Integration.
The "Placement" stage is the initial process by which
launderers inject their illicit proceeds into the financial
system. This may include the physical disposal of large amounts
of cash into banks, as we saw during the late 1970s and early
1980s; or by "structuring" or "smurfing" cash deposits of less
than $10,000 into banks and other financial institutions
including casinos. Many other methods of placement exist
including the smuggling of bulk cash out of the United States for
placement into the financial system in other jurisdictions.
Generally, during the placement stage money launderers must
utilize bank and nonbank financial institutions (NBFIs),
including casinos.
Structuring is the technique for depositing cash or
converting it to monetary instruments to avoid the filing of
currency reporting forms. For example: Person A has a total of
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3
$18,000 in currency and wants to deposit it into a bank account
without a currency transaction report being filed by the bank
with the government. Person A purchases a cashiers check for
$9,000 then deposits the cashier's check with the remaining
$9,000 in cash in the bank account. Under the BSA, Person A has
structured his financial transactions to avoid the currency
reporting laws.
Once the illicit proceeds are placed into the financial
system, they are easily moved around to separate the funds from
their source by creating complex layers of financial
transactions. This is known as the "Layering" stage and often
money launderers convert the placed cash into cashiers checks or
wire transfer funds from one bank account to another, from one
bank to another, and from one country to another. These layers
of financial transactions, even with their paper trails, make it
difficult (and sometimes impossible due to foreign bank secrecy
laws) for law enforcement to follow and trace the illicit funds
back to the launderer or illicit activities.
The final stage of the money laundering process is
"Integration" where the launderer moves the funds back into the
economy by creating a legitimate appearance or explanation of the
once illicit proceeds. The use of front companies, sham loans,
real estate transactions and gambling winnings are just a few
exaimples of the integration of illicit proceeds into the economy.
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4
After the illicit proceeds are integrated back into the economy,
the launderers have successfully completed their objective. Many
people equate money laundering solely with the proceeds of
narcotics trafficking. However, to IRS it includes income
derived from any illicit activity, including white collar crime,
as well as unreported income from an otherwise legitimate
activity .
Because of the efforts of law enforcement and regulatory
compliance functions, money laundering techniques are constantly
changing. Where once we concentrated our efforts on the deposit
of large sums of cash into banks, we now focus our efforts toward
less traditional methods of money laundering, such as the use of
non-bank financial institutions (NBFIs) including casas de
cambio, money transmitters, giros, check cashing businesses,
casinos, and those that sell money orders. Further, experience
has shown that money launderers have not stopped at the use of
non-bank financial institutions; rather, they have utilized cash
intensive trades and businesses, and have resorted to cash
purchases of material assets which are later resold. Because of
this evolution, we too must remain flexible in continually
seeking new and innovative ways to address this ever-changing
criminal activity.
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II. IRS JURISDICTION PERTAINING TO MONEX LAUNDERING ENFORCEMENT.
When we speak of "money laundering enforcement," we actually
are making reference to the enforcement of three separate laws;
The recordkeeping and currency transaction reporting requirements
of the "Bank Secrecy Act" (Title 31); Section 60501 of the
Internal Revenue Code (Title 26); and, the money laundering
criminal statutes (Title 18). The Bank Secrecy Act (BSA) and IRC
Section 60501 provide a means to identify and fight money
laundering through currency transaction reporting and financial
recordkeeping. The money laundering criminal statutes provide a
direct means for the investigation and prosecution of money
laundering activity. These three laws prescribe severe criminal
and civil penalties and forfeiture provisions .
The IRS has a dual responsibility in its anti-money
laundering role: IRS, through its Criminal Investigation
Division, has been delegated authority to conduct criminal
investigations relative to financial transactions involving money
laundering activity. This includes the criminal money laundering
offenses of Title 18; and, the currency reporting crimes of the
BSA (Title 31) and IRC Section 60501 (Title 26).
IRS Examination is responsible for ensuring compliance with
the reporting and recordkeeping provisions of the BSA by all
financial institutions under its jurisdiction. These include any
financial institution not under the supervision of federal bank
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6
regulatory agencies or the Securities and Exchange Commission,
i.e. , all nonbank financial institutions and include casinos
(except those located in Nevada). Examination also is
responsible for ensuring compliance with Section 60501, which
presently applies to all trades or businesses other than those
subject to the BSA, including Indian Gaming operations.
Bank Secrecy Act
Under the authority of the Bank Secrecy Act, Congress
established certain currency information reporting requirements.
These reporting requirements help us identify those persons who
attempt to conceal their participation in crimes where
substantial amounts of currency are involved. The information
reports provide a paper trail of records that must be maintained
by financial institutions for a period of five years. Of equal
importance to the reporting requirements of the BSA, the BSA also
contains requirements that financial institutions maintain
records necessary to reconstruct financial transactions in the
event of a later criminal or tax case. The Bank Secrecy Act and
its reporting requirements provide additional tools to curb money
laundering indirectly by authorizing criminal prosecution of
those persons who intentionally fail to file, or file false,
currency information reports. IRS has been delegated authority
to conduct all criminal investigations relative to the BSA with
the exception of matter involving cross-border transportation of
currency and monetary instruments (U.S. Customs Service Currency
136
7
and Monetary Instruments Reports - CMIRs). IRS' regulatory
responsibilities include ensuring the timely and accurate filing
of the following three Bank Secrecy Act reports:
1. Currency Transaction Report (Form 4789). A "Currency
Transaction Report" (CTR) must be filed by a financial
institution for each cash deposit, withdrawal, exchange, or other
payment or transfer involving currency in excess of $10,000 on a
business day.
2. Currency Transaction Reports by Casino (Form 8362). Any
licensed casino operating in the United States with gross annual
gcuning revenues in excess of $1 million must file a "Currency
Transaction Report by Casino" (CTRC) for each currency
transaction in excess of $10,000 on a day. A currency
transaction at a casino includes both incoming and outgoing cash.
CTRCs are not currently required to be filed by Indian Geuning
operations or casinos located in Nevada.
3. Report of Foreign Bank and Financial Accounts (Treasury
Form TDF 90-22.1) . Any person subject to U.S. jurisdiction
(including a U.S. citizen residing abroad) who has a financial
interest in or signature authority over account (s) with a value
of more than $10,000 must file a Report of Foreign Bank and
Financial Accounts (FBAR).
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8
IRC Section 60501
Section 60501 of the Internal Revenue Code provides another
key tool for the tax compliance and law enforcement community to
use in its efforts to detect unreported or illicit income and
prevent the laundering of that income. This section requires the
reporting of receipts of cash in excess of $10,000 by persons
engaged in any trade or business (other than financial
institutions required to report under the BSA) on a Report of
Cash Payments Over $10.000 Received in a Trade or Business (IRS
Form 83001 . This section applies to casinos with gross annual
geiming revenue of $1 million or less (the BSA applies to casinos
with over $1 million) and to all Indian gaming operations.
Section 60501 is referenced in the Indian Gaming Regulatory Act
( hereinafter the Act ) .
Similar to the BSA, Section 60501 provides for both civil
and criminal sanctions for failure to file reports; for filing
false reports; and, for structuring, or assisting in structuring
financial transactions to evade tne reporting requirements.
Unlike the BSA, Section 60501 contains provisions for
notification to the effected parties and for the inclusion of
certain monetary instruments as cash. IRS Examination is
responsible for ensuring the reporting requirements are met and
IRS Exeunination conducts routine compliance checks of businesses.
IRS Criminal Investigation conducts investigations of alleged
criminal violations of Section 60501 which are prosecuted
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9
criminally under the provisions of IRC Section 7203 (willful
failure to file) or Section 7206 (false or fraudulent statement).
A database of these required currency reports is maintained
by IRS in the Currency and Banking Retrieval System (CBRS) at our
Detroit Computing Center. This database is used by IRS for civil
and criminal law enforcement and tax administration purposes.
Certain information contained in the database is also
disseminated to other federal and state agencies for law
enforcement and regulatory purposes.
The following exeimple illustrates the distinction between a
casino required to file a CTRC as compared to an Indian Tribal
casino required to file Forms 8300:
Casino A is a non-Tribal casino subject to the BSA. Casino
B is a tribal casino subject to Section 60501. Gambler Doe walks
into Casino A and purchases chips for $15,000 in cash. At the
end of the night Geunbler Doe cashes in his chips including
winnings and receives $25,000 in cash. Casino A is required to
file a CTRC which provides identification information on Gambler
Doe and reports both of the transactions — cash in upon entry
and cash out upon departure. Gambler Doe then enters Casino B
and purchases chips in exchange for $15,000 in cash. Geunbler Doe
later departs after cashing in chips for $35,000 in cash.
Pursuant to Section 60501, Casino B is only required to provide
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10
identification information and report only the first half of the
transaction — the incoming cash to purchase chips upon entry.
This limited information reporting cuts off the paper trail
thereby eliminating further financial analysis of Gambler Doe ' s
currency transactions. In addition. Casino A is required to
maintain additional supporting documents concerning Gambler Doe * s
financial transactions for five years. Casino B is not required
to maintain any additional documents.
III. VULNERABILITY OF CASINOS FOR MONEY LAUNDERING ACTIVITY
In May of 1985, the Department of the Treasury amended the
BSA regulations (31 C.F.R. Part 103) to designate non-Tribal
casinos as financial institutions subject to the BSA currency
reporting and recordkeeping requirements. Like other financial
institutions, non-Tribal casinos must complete a currency
reporting form (CTRC) for all currency transactions in excess of
$10,000, whether as a deposit, withdrawal, exchange, or
redemption or purchase of chips, receipts from slot machine
payoffs, etc. In addition, like the other financial
institutions, non-Tribal casinos must maintain specific financial
records for five years, including player rating cards maintained
by the casino to monitor its customer's waging wins and losses.
IRS Excunination has been delegated the authority to examine non-
Tribal casinos (except those located in Nevada) for compliance
with the BSA requirements.
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11
Also in 1985, the Department of the Treasury entered into a
Memorandum of Agreement with the State of Nevada. Pursuant to
the agreement, the State Gaming Control Board assumes regulatory
responsibility for casinos located in Nevada. Nevada casinos
file reports under state regulatory requirements similar to the
CTRCs for cash-in transactions directly with the State Gaming
Control Board. Nevada casinos also file currency transaction
incidence reports for cash-out transactions directly with the
Board. These reports are then forwarded to the IRS for inclusion
in the Detroit Computing Center database containing the other
CTRCs .
Prior to the BSA application to casinos, money laundering
activities occurred involving casinos in a variety of ways
including the purchase of chips with large cunounts of cash and
later redeeming the chips for casino cashier ' s checks without
significant geunbling. Casinos also have been utilized to
exchange narcotics proceeds in small denomination bills for $100
bills to ease smuggling cash out of the country. The currency
reporting and recordkeeping features of the BSA have enabled the
IRS to utilize the CTRCs to successfully identify and prosecute
individuals involved in money laundering where casinos were
involved. The following are only a few such examples.
' An attorney laundered over $3 million dollars of drug
proceeds from his client at the casinos over a period of
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12
several months. The attorney exchanged large amounts of
cash for casino cashier's checks without any substantive
gcunbling activity. The attorney eventually pled guilty to
failure to file CTRs (since the attorney was acting as a
non-bank financial institution), conspiracy to launder money
and drug conspiracy. He was sentenced to 15 years in
prison.
An individual using false identification, cashed out casino
chips for "high rollers" for a 5% fee. The "high rollers",
including numerous narcotic traffickers would purchase chips
and gamble enough to avoid suspicion and then give the chips
to this "five percenter" to redeem for them. The "five
percenter" would redeem the chips in $100 dollar bills and
allow the CTRCs to be filed using his false identification.
Over a period of 11 months, 5 casinos filed 45 CTRCs
totaling over $1 million, containing false identification
information provided by the "five percenter". The "five
percenter was eventually prosecuted and convicted.
An attorney entered into an agreement with an international
heroin smuggling organization to launder their drug proceeds
for a fee of 3%-5%, depending on the eunount handled. The
attorney took receipt of millions of dollars of heroin
proceeds in $5, $10, and $20 dollar bills. The attorney
used "smurfs" to exchange these small bills for $100 bills
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13
at numerous casinos. The less voluminous $100 bills were
then smuggled to the Bahamas, Canada, and Bermuda. The
currency was then shipped from Canada and Bermuda by
commercial couriers to Switzerland for deposit into banks.
Wire transfers were used to move the money from the Bahamas
to the same Swiss banks.
The CTRCs and other BSA required records are also utilized
for successful civil and criminal tax enforcement. IRS
Examination and Collection divisions utilize this data to
identify potential nonfilers as well as to identify unreported
taxable income.
Although subject to the BSA since 1985, casinos were not
previously required to implement a BSA compliance program within
each casino. However, Atlantic City casinos did voluntarily
adopt BSA compliance programs as far back as November 1988.
Pursuant to the new Treasury Department regulations effective
March 1, 1994, each casino will have to develop and implement a
BSA compliance program reasonably designed to assure and monitor
compliance with the BSA. Each compliance program is required to
include components for:
1) internal controls;
2) testing (auditing) of compliance;
3) training of casino personnel in BSA compliance
responsibilities ;
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14
4) appointment of personnel to assure day-to-day
compliance;
5) identification of required persons;
6 ) identifying reportable or recordable multiple
transactions; and,
7) use of in-house information and computer systems to
enhance compliance.
These BSA compliance progreuns are similar to those imposed
on all federally regulated banks since 1987 which have proven to
be successful. Treasury BSA compliance initiatives, such as the
imposition of these compliance programs, have contributed to the
significant reduction in money laundering activity involving
traditional banks. Treasury continues to work with the casino
industry to strengthen the industry ' s commitment to preventing
money laundering .
IV. INDIAN GAMING INDUSTRY AND BANK SECRECY ACT APPLICATION
In 1988, Congress enacted the Indian Gaming Regulatory Act,
25 U.S.C. 2701 et .sea. . which governs gaming operations conducted
on Indian lands. Section 20(d)(1) of the Act (25 U.S.C.
2719(d)(1)) provides that certain provisions of Title 26,
including Section 60501, shall apply to Indian gaming operations.
There is a technical defect in the Act which says 60501 pertains
to gambling winnings. Of course Section 60501 applies only to
incoming cash and not to cash-out as winnings. Nevertheless, it
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15
is our view that Indian Tribal casinos are presently subject to
the limited currency reporting requirements under Section 60501
which pertain to cash received and contain no recordkeeping
requirements. In comparison, the BSA mandates a comprehensive
currency reporting and detailed recordkeeping system with
numerous anti-money laundering safeguards.
Based upon IRS ' s investigative and regulatory experience , we
know that loose or inadequate regulation and recordkeeping will
lead to enforcement problems. Over the past ten years or more,
every action the federal government has taken to eliminate or
reduce identified methods of money laundering, has generated a
counteract by the creative launderers who continue to expand to
new and inventive methods to launder their illicit proceeds . We
believe the I ndiari Gaming industry, while still in its infancy,
would substantially benefit from additional regulation and
recordkeeping covering currency transactions to implement
additional safeguards for deterrence of money laundering.
The Indian Gaming industry is relatively new and the Act has
only been in place a short time. Some of the tribes are unsure
of their new responsibilities pertaining to the casinos under
federal law. In this regard, IRS Examination has initiated an
extensive nationwide outreach progreun aimed at educating the
Indian geuning industry of its responsibilities.
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16
IRS Examination is working with the tribes to better
understand issues in Indian Country and has developed and
implemented a plan to address these issues. Activities of this
plan included making presentations and staffing information
booths/exhibits at tribal conferences dealing with Indian Gaming
such as: United South and Eastern Tribes (USET); National Indian
Gaming Association (NIGA) ; 1st Annual Indian Nations Gaming and
Trade Show; National Conference on Indian Gaming; and. National
Congress of American Indians (NCAI) mid-year conference. Future
planned conference activities involve the Northwest Indian Gciming
Tribe (NIGT) and the Midwest Indian Gaming Association (MIGA) .
The Tribal leaders have been very receptive to this outreach
process.
IRS Examination is also chairing an inter-agency task force
consisting of representatives from the Department of the
Treasury; Department of the Interior (Bureau of Indian Affairs,
Indian Gaming Management Office, and the National Indian Gaming
Commission); Bureau of Alcohol, Tobacco and Firearms; and all
functions of the IRS. IRS Examination has also been active
within the IRS organization educating the Service nationwide on
Indian Geuning and related issues.
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17
V. RECOMMEKDATIONS AND CONCLUSION
Based on IRS and Treasury involvement with the Indian Gaming
industry to date, I am providing the following joint IRS/Treasury
recommendation for the Subcommittee's consideration.
We recommend a statutory amendment to both the Bank Secrecy
Act and the Indian Gaming Regulatory Act to specify that Indian
Gaming operations are subject to the Bank Secrecy Act rather than
to Section 60501. The comprehensive nature of the BSA would
provide additional safeguards to the tribes, while providing law
enforcement the paper trail necessary for effective and efficient
financial enforcement.
In addition, the IRS and Treasury plan to work jointly with
the Justice Department to coordinate a national Indian Gcuning
Conference and will continue the ongoing outreach-education
initiatives with the Indian Gaming industry.
In conclusion, I would like to emphasize that our goal is to
strengthen cooperative relationships among the Federal agencies
working with the Indian Gciming industry. I thank the
Subcommittee for its interest in our activities relating to money
laundering enforcement and the Indian Gaming industry. We would
be pleased to respond to any questions you may have.
147
Mr. Richardson. Thank you.
The chair recognizes the gentleman from Wyoming.
Mr. Thomas. Just one very quick question, Mr. Urgenson.
When you are asked to investigate or prosecute, where do the
complaints come from normally? Do they come from this regulatory
commission, or how do you arrive at where there is a problem?
Mr. Urgenson. Complaints often come— they are delivered most
often in the field to the local United States Attorney's office or the
to the FBI, and perhaps Mr. Moody could elaborate more specifi-
cally.
Mr. Moody. Concerning organized crime investigations, over 90
percent of all of our investigations are based upon our own intel-
ligence base. We don't have that many people come through the
front door and tell us about organized crime.
Mr. Thomas. Well, that is good. I am glad to hear that.
I am just curious. You need some sort of a regulatory group, it
would seem to me. That is not your role, is it, in the Justice De-
partment?
Mr. Urgenson. Typically, in a regulated industry, a good portion
of the referrals come from the regulatory community. That is an ac-
curate statement, yes.
Mr. Thomas. Tell me just quickly the comparison between — what
is your involvement in private gaming such as in New Jersey that
is not tribal? Do you have any particular involvement in that?
Mr. Urgenson. The involvement, I suppose, would be limited to
federal crimes, such as organized crime and perhaps money laun-
dering, and Mr. Moody indicates he would like to add to that.
Mr. Moody. We have memoranda of understanding with both
Nevada and New Jersey, groups that address the gaming in those
States. Both of them have law enforcement authority, so it makes
it very easy to work with them.
Mr. Thomas. So your involvement with tribal gaming and
nontribal gaming is similar?
Mr. Moody. With tribal gaming, it is different in that we have
requests come in and we respond to them, but not all of the agen-
cies that have oversight have law enforcement authority, so we
can't quite share the same type of information.
Mr. Thomas. I see.
Thank you, Mr. Chairman.
Mr. Richardson. The chair recognizes the gentleman from Cali-
fornia.
Mr. Calvert. Thank you, Mr. Chairman.
My question is also for Mr. Psdmer.
In California, as you know, we only have Class 2 gaming. How-
ever, there are certain reservations that are engaged in Class 3
gaming at the present time. The National Indian Gaming Commis-
sion is only empowered to enforce Class 1 and Class 2 gaming, and
so the Class 3 gaming in California is not being regulated.
The 700-plus slot machines that are in California at the present
time — ^what types of controls are in place at the present time to
find out where that money was coming from and where it is going?
Mr. Palmer. Congressman, I don't know if I can answer that
specifically, but right now, as I stated, as far as the civil side of
the Internal Revenue Service, Department of the Treasury, that
148
would fall under the compliance of the Examination Division. I can-
not specifically answer. I don't know exactly what we are doing in-
sofar as those specific locations in California. But I will be happy
to get back to you and provide you with the record of that.
But as I said in my statement, as long as those activities do not
fall under the supervision of the Federal Bank Regulatory or the
SEC, they would fall under the purview of the Examination Divi-
sion as far as civil oversight.
Mr. Calvert. What mechanisms are currently in place to ensure
that the cash flow in an Indian casino is fully and effectively mon-
itored?
Mr. Palmer. Pardon? Could you repeat that?
Mr. Calvert. What mechanisms? Is this the same? Would it be
the same answer? What mechanisms are currently in place to en-
sure that the cash flow in an Indian casino is fully and effectively
monitored?
Mr. Palmer. That would also be within the Examination Divi-
sion.
Mr. Calvert. So we would need to talk to someone within the
Examination Division to get an answer to those questions.
Mr. Palmer. Yes, sir.
Mr. Calvert. I understand — and maybe this question would go
back to Mr. Moody — that there is no control on the revenue that
is coming out of those slot machines, for instance, in California. Is
that an accurate statement?
Mr. Moody. I believe that is an accurate statement, yes, sir.
Mr. Calvert. I understand that there is also no control on the
types of odds on those machines or the quality of the machines. Is
that an accurate statement?
Mr. Moody. I believe that is an accurate statement.
Mr. Calvert. I also understand that the National Indian Gam-
ing Commission has no right, no jurisdiction, to involve itself in
Class 3 gaming in California since Class 3 gaming technically is
not legally permissible in California, so nobody is regulating that.
Is that an accurate statement?
Mr. Moody. I would rather you asked that with the Gaming
Commission, sir. As far as I know in California, there are some
regulatory agencies set up because you also have the card clubs out
there. The specificities of what the Gaming Commission does, I
would appreciate it if you would refer that to them.
Mr. Calvert. Do we have any idea then if it is accurate to say
that that revenue isn't being— do we know where the money came
from in the first place to acquire those slot machines? Do we have
any knowledge of that?
Mr. Moody. No, sir, I don't. I can look into it.
Mr. Calvert. If I can continue on this, it is common knowledge
that Class 3 gaming is being conducted on many California, New
Mexico, Washington State Indian reservations without a tribal-
State compact, including electronic games of chance, video-poker,
slot machines, and video black jack. Is it not a violation of State
and Federal law to conduct such gaming without a compact, as-
suming the States can compact for the games in the first place?
Mr. Urgenson. I think it would be a violation of the law to con-
duct Class III games without a compact, that is correct, and the
149
issue for us is whether or not it would be something which war-
rants law enforcement, criminal law enforcement, involvement.
As I have attempted to indicate in our statement, that is a very
complicated question which requires an analysis of the specific
facts, and if there is any specific evidence of such conduct which
should be addressed in California, I think it should be addressed
through the United States Attorney's office there.
Mr. Calvert. To carry on from what you just said, why is the
Federal Government allowing Class 3 gaming to take place in Cali-
fornia if, in fact, it is not allowed?
Mr. Urgenson. I am not familiar with the specific factual situa-
tion in California, so I can't give you a detailed response. What I
have generally tried to address in my statement is that there are
instances in which it is alleged that illegal Class III gaming is
going on in a particular jurisdiction, and whether or not it is in fact
Class III gaming, whether or not the classification is in question,
whether there are ongoing negotiations with respect to a compact,
whether or not there is litigation in court concerning the fairness
with which the States have dealt with the tribes, are all factors
that are considered in a specific case as to whether or not we are,
as you might suggest, allowing something or acting.
Mr. Calvert. I will ask Mr. Moody.
Mr. Moody, do you think that 700 slot machines in Southern
California would classify as Class 3 gaming?
Mr. Moody. That depends upon my counsel here on my right.
Whenever we have situations like that, quite frankly, we wait until
it is cleared up more before we commit manpower to conduct inves-
tigations on something like that.
Mr. Calvert. I had just one more question for you, Mr. Moody.
There was an article in U.S. News some time ago when you were
asked a question, "Which crime families are involved in Indian
gaming?" Do you remember your answer to that question?
Mr. Moody. No, sir, I don't.
Mr. Calvert. According to U.S. Business News Report, "I don't
know of any that aren't."
Mr. Moody. No, that is not quite a quote. The question was,
"Which crime families would be interested in Indian gaming? " And
I believe that I responded that I don't believe I would know that
any wouldn't be.
If you go back to my original definition, organized crime address-
es— they are after money, and any time they can penetrate a gam-
bling operation that generates large amounts of money, they will,
but, as Mr. Urgenson said, we do not see a concerted effort by orga-
nized crime to infiltrate Indian gaming. We have had a couple of
instances that we have investigated; we have had one that we have
prosecuted.
Mr. Calvert. Thank you, Mr. Chairman.
Mr. Richardson. I recognize the gentleman from Hawaii.
Mr. Abercrombie. Thank you, Mr. Chairman.
Mr. Urgenson, on page 4 of your testimony, you say, "Similarly,
there has been little evidence of illegal activity committed by crimi-
nal elements not associated with major organized crime families."
And then in reference to — keeping that in mind, if you would — ^Mr.
Palmer's testimony, which, parenthetically, Mr. Palmer, I want to
150
say is exceptionally well stated. It has taken a relatively com-
plicated issue that some of us may not be familiar with and stated
it in such a way as it makes it crystal clear as to what we are deal-
ing with.
Mr. Palmer's testimony — I don't know if you have had a chance
to go over it in detail, Mr. Urgenson
Mr. Urgenson. No, but I have listened to it.
Mr. Abercrombie. Okay — indicates that a lot of the difficulties
with respect to casinos are outside forces or elements, like lawyers
trying to launder drug money, for example, trying to utilize a ca-
sino. Am I correct that this could be done by any person intent
upon that kind of activity in any casino, whether it was Indian
gaming or anybody else legitimately pursuing gambling?
Mr. Urgenson. I think that is a fair statement.
Mr. Abercrombie. Is that your contention also, Mr. Palmer?
Mr. Palmer. Yes.
Mr. Abercrombie. That it wouldn't necessarily be zeroing in on
Indian gambling?
Mr. Palmer. No, of course not.
Mr. Abercrombie. Then, Mr. Palmer, if I could go to you, the lat-
ter part of your testimony on page 15 and 16 — would it be correct
to summarize that testimony as indicating that you have a good
working relationship with various tribal groupings and gambling —
gaming interests among tribes with respect to what their obliga-
tions are and what they can do to improve their capacity to resist
this kind of infiltration, criminal infiltration?
Mr, Palmer. Congressman, I would answer that, we are still in
the infancy, but our experience, you know, during this infancy, is,
I would say yes, we have had a very good reception from, I think,
most, if not all, the tribal leaders, trjdng to educate them in our
outreach process, and, as I said, educate them as to what their re-
quirements are so that they can be in compliance with 60501, or,
if this changed, to the Bank Secrecy Act, to ensure the proper safe-
guards and checks and balances will be there.
Mr. Abercrombie. Then finally, are the recommendations that
you are making in your testimony — and I want to indicate, I have
only gone over your testimony this morning, so I may have missed
a sentence or two that more specifically addresses my questions.
But are the recommendations that you are making with respect to
the Bank Secrecy Act and the 60501 regulations — are you making
these recommendations with respect to all reporting with respect to
gambling transactions, gaming transactions, or more specifically to-
wards gaming and tribal activity?
Mr. Palmer. I will let Mr. Djinis
Mr. Djinis. Maybe if I can clarify — I hope I understand the ques-
tion correctly — I think the recommendation essentially is that the
Treasury Department be authorized to place and to issue regula-
tions that would place Indian casinos under the Bank Secrecy Act,
under the same types of requirements that are subject now.
That is not to say that every form of Indian gaming, whether it
is a slot machine or other kinds of gaming, would be subject to the
Bank Secrecy Act but, rather, the same kinds of standards that are
employed now for nontribal gaming.
151
Right now, the Treasury Department has regulations which es-
sentially kick in at a $1 million gross earnings level per year, and
presumptively the same standards would apply for tribal gaming.
Mr. Abercrombie. So you see the principal danger here over and
above the questions of whether it is a good idea to have gaming or
not or whether there is an adequate compact negotiated, and I am
taking into consideration Mr. Urgenson's multiple examples of the
difficulties of trying to decide whether to prosecute something or
whether to move forward on any legal basis, civil or otherwise,
keeping that in mind. Your intentions here are to deal principally
with laundering activities and other activities that would be crimi-
nal in nature over an above the question of the operation of the ca-
sinos themselves, right — the gaming operations themselves?
Mr. Palmer. Yes, that is correct. Congressman.
Mr. Abercrombie. Now, are there any exemptions presently ex-
isting to the kind of reporting processes that you are recommend-
ing here?
Mr. Palmer. No, other than the fact right now the Indian casinos
are under 60501 versus the BSA, the Bank Secrecy Act, and an ex-
ample I gave, right now under 60501, the filing of the Form 8300
really only gives us the first half or the first third of the trans-
action— that is, the money the player brings into the casino —
whereas the amendment into the Bank Secrecy Act will show all
the exchanges of money which happen, not only the money that is
brought into the casino, the exchange for chips, the winnings,
winnings from the slots, it gives the whole financial picture so
there is an adequate audit trail then for financial or law enforce-
ment purposes.
Mr. Abercrombie. Would it be fair to say that if your rec-
ommendations were incorporated into the existing law and/or regu-
lations that come from the existing law, that this would go a long
way toward ensuring both the tribes and the general public that
the operations were being conducted on a basis that were as devoid
as possible of infiltration of criminal activity?
Mr. Palmer. I believe it would be a major step in the right direc-
tion, yes.
Mr. Abercrombie. Thank you very much.
Mr. Richardson. The chair recognizes the chairman of the com-
mittee.
Mr. Miller. Thank you.
Following up on Mr. Abercrombie's point, is there anything in
the law that would prohibit the Secretary to extend these provi-
sions of the Bank Secrecy Act to the Indian gaming?
Mr. Djinis. Well, generally the way that the currency reporting
statutes — the Federal currency reporting statutes — work is that ei-
ther you are a financial institution, which is defined under our reg-
ulations, or you are a trade or business.
Right now, our regulations do not define tribal casinos as a ca-
sino. Therefore, it is not a financial institution and not subject to
the Bank Secrecy Act. Therefore, it is a trade or business, and that
is consistent with the Indian Gaming Regulatory Act and to the ad-
monition that 60501 reporting should occur.
152
So it is our view that unless the statute is changed, tribal casinos
are not subject to the Bank Secrecy Act and we cannot issue a reg-
ulation to that effect.
Mr. Miller. What is the arrangement with the State of Nevada
in the Bank Secrecy Act?
Mr. Djinis. The State of Nevada, pursuant to regulations in the
Bank Secrecy Act and pursuant to a memorandum of understand-
ing between Treasury and the State executed in 1985, has adopted
its own parallel system of reporting, if you will, where it is sub-
stantially similar to the Bank Secrecy Act.
Those reports are submitted to the Nevada regulators, which in
turn are submitted to the Internal Revenue Service, but the report-
ing itself goes from the casino to the regulator and then ultimately
to the Internal Revenue Service.
Mr. Miller. Does the IRS reserve to itself the right to audit
that? Has the IRS authority under law to audit those reports?
Mr. Djinis. Well, it is interesting you should ask that question.
Traditionally, the examination component has been conducted by
the State, but the State — ^we had meetings with the State just
three weeks ago, I believe, and we are going to be doing a joint
compliance examination.
So there is nothing that prohibits compliance examinations being
conducted by the Internal Revenue Service, and we will see how
this one works out.
Mr. Miller. So what is the current arrangement prior to this
new process? They do this auditing themselves, and they turn that
in to the IRS. For what use by the IRS?
Mr. Djinis. Let me just see if I can clarify.
Mr. Miller. Thank you.
Mr. Djinis. The auditing that I am referring to — and I hope it
is the same question that you are referring to — is the auditing or
the examination by the Nevada regulators, by the Nevada Gaming
Control Board, over the casino's compliance with Nevada's report-
ing system and other provisions.
Mr. Miller. The purpose of which is the same as, in theory, the
same as
Mr. Djinis. The purpose is identical in theory to the examination
component that the Internal Revenue Service performs when exam-
ining casinos' compliance in Atlantic City, for example, with the
Bank Secrecy Act.
Mr. Miller. But when you went through your examples of Ca-
sino A and Casino B, the purpose of the Bank Secrecy Act in the
Nevada regulatory scheme is for the purposes of watching the flow
of the money, for the purpose of laundering. Is that correct?
Mr. Djinis. Well, I think it is a broader purpose. Number one,
the purpose — there are three recognized components of the Bank
Secrecy Act: Its use in criminal investigations and proceedings, in-
cluding investigations concerning financial crime; its use in identi-
fying tax enforcement essentially, to be utilized for tax enforcement
purposes; and the third, as you have mentioned, consistent with
the Bank Secrecy Act, is for determining regulatory compliance.
So clearly, money laundering is a very important component, but
there are three vital interests that are in effect in the Bank Se-
crecy Act.
153
Mr. Miller. But those records are — basically, Nevada has set up
its own system of compliance and then has its own system of audit-
ing whether or not compliance is taking place, and that is the end
of the process. They turn the data over to the IRS, but the IRS,
under the current system today, has no ability or does not go in
and audit whether or not the compliance is achieving the goals for
the purpose for which it was set up an/or whether it is accurately
done. That is not done today?
Mr. Djinis. Well, I cannot — obviously, I am not with the Nevada
Gaming Control Board, so I can't speak to the efficacy of their ex-
amination process.
Mr. Miller. I understand that.
Mr. Djinis. What I can say is that there is a process in the State,
and we will find out there through this joint examination. At least
there will be an inquiry into the utility of the program there.
The Gaming Control Board in the Nevada has not sat idly by;
they have enforced violations of their own compliance program over
the years.
Mr. Miller. But in terms of the injection of what is this new ar-
rangement that you are laying out, you are now injecting essen-
tially Federal oversight, because you will go through a joint audit-
ing process to determine whether or not the purposes of the Bank
Secrecy Act are in fact being complied with by this system of State
regulation that is put in, in lieu of the Bank Secrecy Act.
Mr. Djinis. I think that is correct.
Mr. Miller. To date, we don't know that, as a matter of ongoing
oversight. We may know it in a specific case where one system
broke down or you didn't catch one transaction and somebody
might have caught it under a different system, but that is not a
matter of ongoing oversight.
Mr. Djinis. That is correct.
Mr. Miller. Why are you going to this new regime?
Mr. Djinis. There are a number of different reasons, and I think
the best way to describe it is that the thinking has evolved, the
thinking in terms of anti-money-laundering compliance, the think-
ing in terms of our experience with examining casinos and the In-
ternal Revenue Service's experience with examining casinos in
other properties such as New Jersey and in Puerto Rico.
We have a certain degree of expertise to offer, and I think it is
also true that Nevada, which has been dealing with these subjects,
has their own degree of expertise to offer. We see gaming extending
to numerous other States, and it is time for us now to start work-
ing together.
Although there is a parallel system in place in Nevada, that is
not to suggest that either we can't learn from the systems that
have been employed in Nevada or that I believe the Nevada Gam-
ing Control Board can learn from some of the techniques, the au-
diting programs, the computer software that we have developed to
ensure compliance with the BSA as well. It is time for us to start
working together.
Mr. Miller. What is the rate of violation today within the casino
industry in the Bank Secrecy Act?
Mr. Djinis. The rate of violation?
154
Mr. Miller. Do you get five a year? Ten a year? How many
transactions? Is this a lot of transactions that are monitored? There
are obviously a lot of transactions, I assume, that are monitored.
Mr. Djinis. All of the currency reports are fed into a database,
a Treasury database, and I don't have the exact figures with me
right now, but I believe we are looking at something in the nature
of approximately 60,000 such transactions, all in excess of $10,000
in currency that are filed annually.
Mr. Miller. And the Justice Department — the compliance,
where are you on that? Is this all done in compliance, or are there
people out of compliance? Do you have prosecutions open?
Mr. Urgenson. I am not aware of specific instances, or statistics,
I should say, with respect to casino-based prosecutions. I know that
evidence of money laundering in casinos frequently comes up in
connection with white-collar and other kinds of prosecutions. So it
is a very useful database to have, and there is a lot of money
laundered through casinos. But I couldn't give you a specific statis-
tic as I am sitting here.
Mr. Miller. I guess what I am trsdng to determine is, given the
Bank Secrecy Act and the regulatory schemes that we have set up,
this apparently — what you are saying is that it is apparently a sort
of typical endeavor to try and launder money. Whether or not you
are successful or not is different, but this is looked upon as an in-
dustry in which you can certainly — it is worth making the attempt,
or do people attempt it on a regular basis?
Mr. Urgenson. I think that is a fair statement, yes.
Mr. Miller. It is a method.
Mr. Moody. By an individual generally. If you have an organized
crime group take over the casino, they are going to launder it any-
way and not comply with that in the first place. But then the law
itself enables us to later on reconstruct what happened. The major-
ity of money laundering in casinos is a method by an individual to
try to launder money through the casino.
Mr. Miller. And that is picked up how?
Mr. Moody. Various ways: Through the computer database
maintained by Treasury, and/or later on we may come up with in-
formation of a certain individual being involved in drug trafficking
or some other activity, where we go back and trace his activities.
Mr. Miller. So it is not an uncommon attempt.
Mr. Moody. No, it is not uncommon.
Mr. Miller. How common are the prosecutions for it?
Mr. Moody. It is getting so in almost all prosecutions the FBI
has on organized crime and white collar crime that money launder-
ing is involved in it. So money laundering of some sort is very ac-
tive, because people are always trying to generate the illegal mon-
ies into legal monies. Now how much is coming out of the casinos
I don't know, sir.
Mr. Miller. How common are prosecutions against casinos?
Mr. Moody. Not very common at all, sir. It has been a number
of years since we have had any against a casino. The casinos them-
selves don't want the money laundering because they are worried
about the taint that would go along with it.
Mr. Miller. It affects their license obviously, I assume.
Mr. Moody. Yes, sir.
155
Mr. Djinis. Mr. Chairman, if I could clarify again, I think there
was testimony that was alluded to earlier about what the Bank Se-
crecy Act involves, and frankly, although the true enforcement of
the Bank Secrecy Act is going to be by compliance by casinos, that
is not to suggest that the currency reports that are required are
there to somehow implicate a casino.
In fact, the majority of our interest is on the patrons' activity, not
on the activity of a particular financial institution, and a lot of the
research, the proactive targeting, or whatever, that is done is fo-
cused upon individuals or people who are identified with organiza-
tions who happen to be conducting transactions through a casino.
The second thing I would like to clarify is that it is not so much
that casinos represent the most prevalent form of money launder-
ing or tax evasion or whatever. Casinos, like other kinds of bank
and nonbank financial institutions under the Bank Secrecy Act, are
subject to currency reporting and other kinds of record-keeping re-
quirements in order to, if nothing else, have a chilling effect to
properly identify individuals engaged in those transactions and to
make sure that there is an audit trail of those transactions when
they involve currency.
Mr. Miller. That is not to suggest that there hasn't been institu-
tional involvement in intentional attempts to go around the Bank
Secrecy Act.
Mr. Djinis. I am not suggesting that at all. What I am suggest-
ing is that there is more than a focus against the financial institu-
tion, whether it is a casino or a money transmitter or a savings and
loan. It is also on the transactions.
Mr. Miller. I understand, but the Act is set up recognizing that
there are two parties to the transaction, right?
Mr. Djinis. That is correct.
Mr. Miller. Okay. Thank you.
Mr. Richardson. Does the gentleman from New Jersey wish to
be recognized for questions?
Mr. TORRICELLI. If I could, Mr. Chairman, for a few moments.
Mr. Moody, your title is that you are with the organized crime
and drug operations of the FBI?
Mr. Moody. Yes, sir.
Mr. Torricelli. And who is it that heads your task force on in-
vestigating Indian gaming?
Mr. Moody. If it has an)i;hing to do with organized crime, I am
responsible.
Mr. Torricelli. No. I mean your dedicated task force to Indian
gaming. Who runs that operation on a day-to-day basis?
Mr. Moody. We don't have a dedicated
Mr. Torricelli. You don't have a task force?
Mr. Moody. No, sir.
Mr. Torricelli. We have in New Jersey 985 people who monitor
18 casinos, virtually an inspector per table. How many agents do
you have dedicated to dealing with the problems of corruption on
Indian reservations on a full-time basis, as we do — ^the number of
people who are dedicated to this purpose?
Mr. Moody. Concerning Indian reservations themselves, we have
other responsibilities on the Indian reservations.
156
Mr. TORRICELLI. I understand that. But dealing with the prob-
lems of gaming we are focused on.
Mr. Moody. Okay. Let me take a step back. Concerning the In-
dian reservations, we have about 44 agents assigned to the Indian
reservations to conduct all sorts of investigations.
Mr. TORRICELLI. On all purposes, you have 44.
Mr. Moody. Yes, sir, organized crime investigators.
Mr. TORRICELLI. How many Indian gaming establishments are
there in the country?
Mr. Moody. They are growing rapidly every day.
Mr. TORRICELLI. Well, isn't it fair to say there are 124?
Mr. Moody. Right.
Mr. TORRICELLI. Now I am told that while we in New Jersey
have an inspector on each table each day in every casino, you do
not have enough agents, in fact, involved in dealing with corruption
on Indian reservations that they could be visited on an annual
basis. Would that be a fair statement?
Mr. Moody. We are not visiting casinos for regulatory functions
on the Indian reservations.
Mr. TORRICELLI. I see. So during the course of a year, a year
could pass and, in fact, these casinos could never be visited by a
Federal official under your jurisdiction. That would be a fair com-
mentary?
Mr. Moody. That is very possible.
Mr. Miller. Would the gentleman yield?
Mr. TORRICELLI. I would be happy to yield to the chairman.
Could I go through a few questions and then
Mr. Miller. Just on that point, your jurisdiction is organized
crime, not casinos?
Mr. Moody. That is correct. My jurisdiction is organized crime.
Now in organized crime I have 903 agents.
Mr. Miller. They work on the organized crime end of the spec-
trum.
Mr. Moody. That is correct.
Mr. TORRICELLI. Well, let's take them that way. How many of
those organized crime people are dedicated to dealing with orga-
nized crime involvement in Indian gaming? I will take the chair-
man's distinction; it is a fair point. How many of those are dedi-
cated to dealing with organized crime in Indian gaming?
Mr. Moody. I do not dedicate any of them to organized crime in
casinos, but I do dedicate them
Mr. TORRICELLI. So the answer is essentially the same, none.
Mr. Moody. But I do dedicate them to organized criminal groups.
Mr. Miller. Let the gentleman finish.
Mr. TORRICELLI. Yes, I would be glad to have him finish. I would
like, though, for this period of time, to go through this relatively
quickly, if I could, Mr. Chairman, because I have a lot of questions.
Mr. Moody. I dedicate the agents to organized criminal groups
involved in the totality of their violations or their activities. That
is what I am interested in.
Mr. TORRICELLI. Well, let's then, to sum up then, before I move
on — the number who are dedicated to organized crime in Indian
gaming is essentially none, and you were not contradicting my
point that during the course of the year, even those who deal tan-
157
gentially with the issue may not visit Indian gaming at all while,
in fact, those other casinos established under laws in New Jersey
and Nevada have hundreds of agents.
If you would like to quarrel with that, I would be glad to have
you do so.
Mr, Moody. No, sir, that is not quite accurate. I don't necessarily
visit any Nevada or New Jersey gaming casino unless I am looking
at organized crime involvement.
Mr. TORRICELLI. No, of course, but we have taken care of that
problem by having 985 people who do.
Mr. Moody. Those are State regulators, yes, sir.
Mr. TORRICELLI. Let me move on, if I could.
Mr. Miller. Would the gentleman yield?
Mr. TORRICELLL Yes.
Mr. Miller. Then you have to compare that to, in many reserva-
tions and the States all have their people who visit the reserva-
tions and ongoing surveillance from local law enforcement, from
tribal law enforcement — okay, so there is an overlay.
Mr. TORRICELLI. Yes, that is a fair point.
How many of the Indian gaming authorities of the Federal Grov-
emment — how many inspectors do they have?
Mr. Moody. I don't know, sir.
Mr. TORRICELLI. Twenty seven. So the combined resources of the
FBI and the Indian gaming authorities are 27.
Let me move on, if I could.
The inspector general's report concluded, on page 2, "Indian
tribes may be losing significant income because of fraud or abuse
in an industry that is generating revenues of $2 billion a year on
Indian lands." Indeed, the report concludes that generally the fraud
could be in the millions of dollars.
Since this report was issued, has there been a new dedication of
resources or an investigation to find the veracity of the inspector
general's report?
Mr. Moody, Not in organized crime because I don't believe that
it states anything in there about organized crime involvement in
that.
Mr. TORRICELLI. No, but I am dealing generally with the ques-
tion of fraud or abuse. This report obviously raises some serious
questions. I am concerned about the FBI's reaction to it and in see-
ing whether or not there is veracity in these claims.
Mr. Moody, I don't know, sir, and it depends also on the individ-
ual reservation whether we are even investigating there,
Mr. TORRICELLI. Mr. Chairman, I will be very brief, but, Mr.
Urgenson, tell me, of the 124 Indian casinos operating, how many
of them have arrangements with the IRS similar to New Jersey or
Nevada, or indeed the Indian casino in Connecticut, with regular
operations to protect against laundering?
Mr. Urgenson. I don't know the answer to that question, Con-
gressman, as to whether any of them have.
Mr. TORRICELLI. You are not aware that any of them have simi-
lar arrangements?
Mr. Urgenson, One way or the other, I am just not aware of it.
Mr. TORRICELLI. I see.
84-760 O - 94 - 6
158
What is important to me is that your testimony here, particularly
you, Mr. Moody, has enormous credibility with this committee and
with this Congress and in many wavs will influence the judgment
of individual Members whether to proceed, and while I think we
should all be appreciative of your presence today and the expertise
that you add, that level of expertise is extremely important for us
to make judgments.
It is obviously my own conclusion that we can neither affirma-
tively discount or account for the level of organized crime involve-
ment, because I don't believe indeed anybody actually knows.
For example, in the Seminole case in Florida, the Department of
the Interior concluded that it could not proceed with an investiga-
tion for lack of resources. Was that indeed followed by an FBI in-
vestigation in the case of the Seminoles?
Mr. Moody. It is my understanding that allegations concerning
the Seminole case in Florida involved an individual by the name
of Anthony Accetturo which, for your information, he was just con-
victed of racketeering charges in New Jersey, not necessarily hav-
ing to do with the Indian casino in Florida,
Mr. TORRICELLI. Yes.
Mr. Moody. So we try to take these individuals out when we
Mr. TORRICELLI. Mr. Moody, lest you think that somehow you
have raised a point here that would deflect my interest, it is your
point that is exactly my interest.
I know where these people are coming from, because I live with
them every day in my State. I know who they are, and I know
what is taking place here. That is why I am asking the question.
Now, before I conclude, I simply want for the purpose of the
members of the committee to understand the level of FBI involve-
ment in this investigation to date. Could you therefore tell me, as
a witness coming before this committee, what you know about the
sourcing of buying slot machines with the Mohawk Tribe in New
York?
Mr. Moody. I don't know anything about the sourcing of slot ma-
chines for the Mohawk.
Mr. TORRICELLI. I see. They were purchased by associates of
John Grotti.
Could you tell me anything about Robert Sabes?
Mr. Moody. No, sir, I don't know anything
Mr. TORRICELLI. Mr. Sabes is involved with the Lucchese crime
family by a contractual basis in that he rents real estate to them
and is involved with Indian tribes in Minnesota.
Finally, could you tell me about the FBI investigation concerning
Mr. Alvarez?
Mr. Moody. I can't tell you about any investigation.
Mr. TORRICELLI. Well, Mr. Moody, I could. Mr. Alvarez was mur-
dered after he refused to engage in discussions on Indian gaming
contracts. He £ind two associates were found dead, according to a
report of the attorney general's office of the State of California.
Mr. Moody, with all due respect, I appreciate the fact that you
are here to help with this questioning, but indeed isn't it fair that
if this were a court of law and you were to have to be sworn in
as an expert witness on Indian gaming and the problems of corrup-
159
tion, it is doubtful that in fact you could be an expert witness on
that issue?
Mr, Moody. On Indian gaming, that may be true, but on orga-
nized crime I have been qualified in several courts as being an ex-
pert witness.
Mr. TORRICELLI. Of course, but we are not talking about the New
York waterfront, we are talking about Indian gaming.
I have no further questions, Mr. Chairman. Thank you for the
time.
Mr. Richardson. I have to ask Mr. Moody just one question, be-
cause this has been, as the gentleman said, a very important panel.
You mentioned that the FBI has fewer than five open investiga-
tions of organized crime in Indian gaming.
Mr. Moody. Yes, sir, I have in the past.
Mr. Richardson. Now how does that compare with any inves-
tigations you are undertaking in New Jersey or Nevada?
Mr. Moody. We have more investigations in New Jersey and Ne-
vada, but as far as the casinos go, we have less than five investiga-
tions in New Jersey or Nevada involving the casinos.
Mr. Richardson. Now, the Rincon reservation case
Mr. Moody. Yes, sir.
Mr. Richardson. Who tipped you off on that?
Mr. Moody. Our intelligence base, sir.
Mr. Richardson. Well, I am on the Intelligence Committee; you
can tell me.
[Laughter.]
Mr. Richardson. All right. Let me thank
Mr. Miller. Mr. Chairman, if I might have a round of questions.
Mr. Richardson. Yes.
Mr. Miller. Mr. Moody, I don't quite get what Mr. Torricelli's
point was, but let me go back and reconstruct what took place here.
Your testimony is — and correct me if I am wrong — is essentially
that your unit has not found any significant problem with respect
to organized crime within Indian gaming. Is that correct?
Mr. Moody. That is correct.
Mr. Miller. Your testimony is not that there have not been inci-
dents where organized crime has tried to take advantage one way
or another within the Indian gaming industry, that there are epi-
sodes, the Rincon Tribe, others where that has happened. In one
case, that has been a successful prosecution.
Mr. Moody. That is correct.
Mr. Miller. Your expertise here is as to the activities of orga-
nized crime, correct?
Mr. Moody. That is correct.
Mr. Miller. And looking at it from the question of whether or
not — what is the extent of the involvement of organized crime,
again, it is that there is no significant activity here to date that
you can document.
Mr. Moody. That is correct.
Mr. Miller. By the same token, the issue of whether or not you
dedicate people to New Jersey casinos or Nevada casinos or Indian
casinos has no bearing on that issue either, does it?
Mr. Moody. No, sir. I dedicate my manpower to the La Cosa
Nostra family.
160
Mr. Miller. I would think that in America when most people
think about organized crimes and the problems that confront them
as taxpayers, Indian casinos would be fairly far down on the list
when they consider all of the problems that we have with illicit
drug involvement, with what happened in some of our banks, with
what happens with illicit gun trafficking. I would assume you are
being prudent when you are not dedicating people to hang out in
Indian casinos to see if they can spot organized crime.
Mr. Moody. I hope I am being prudent. Our target is the La
Cosa Nostra family. We are trying to destroy them, and that is
what we are emphasizing, and we will destroy them on any identi-
fied illegal activity that we can come up with.
Mr. Miller. So if your involvement in this comes through the or-
ganized crime networks, you follow those leads wherever they take
you. They could take you to the race tracks, to a savings and loan,
to a bank, to a politician's office; they could take you anywhere,
right?
Mr. Moody. That is correct, sir.
Mr. Miller. You don't try to come around and anticipate where
they might show up on any given evening.
Mr. Moody. No, sir.
Mr. Miller. I think it is very important, Mr. Chairman, that we
delineate that issue.
Now with regard to the second issue, whether or not there has
been illegal activity within the Indian gaming industry, whether
employees have taken money out the back door, whether dealers
have skimmed, all of the things that we know go on in this indus-
try across the board, people are dismissed on a regular basis within
this industry for some impropriety with respect to the security of
the cash flow. That does not trigger on any level FBI involvement,
does it?
Mr. Moody. It can possibly trigger our involvement if we have
responsibility for the Indian reservation, and it may be referred to
us.
Mr. Miller. But in the general gaming industry that is not the
case. It may trigger the Nevada Gaming Commission, the Indian
Gaming Commission, it may trigger the IRS if this person shows
up that he is signing for all these $10,000 transactions; it may trig-
ger a lot of things; but that doesn't necessarily rise to the occur-
rence of an — I think it is very important here that we understand
that, that we not try to give the illusion that something exists here
that factually does not exist to date as we know it, given the sur-
veillance and the involvement of these agencies that are respon-
sible for it. That does not give Indian gaming or non-Indian gaming
a clean slate with the involvement of their — with State regulatory
agencies, with Federal agencies, with their employees, their man-
agement, and others who are involved in this process. But that is
true of the hardware industry too, and, I suspect, the grocery store
industry, that people are running away with other people's monies
all the time, and we ought to just keep that in perspective, Mr.
Chairman.
I was very concerned that the suggestion was, somehow, because
an FBI agent wasn't on the spot, that that suggested either lack
161
of enforcement or the misapplication of Federal manpowers and re-
sources. Thank you.
Mr. TORRICELLI. Mr. Chairman, would you yield for a moment?
Mr. Miller. Sure.
Mr. TORRICELLL Perhaps we can conclude this round, having dis-
agreed on the past, we could agree on the future.
You were quoted in the Boston Globe last week as saying, Mr.
Moody — and I quote — "I don't believe that organized crime is just
sitting back and saying, "Why would we want to get involved in
that?' I say they are going to be looking at every one of them and
tr3dng to identify certain areas to get into."
Therefore, Mr. Moody, you and I may dispute what has happened
to date, but indeed if you will affirm that that is your quote, I take
it we can agree that in the future organized crime is going to be
looking at Indian gaming as it is now constituted, it is something
on which we need to be vigilant and to address changes in the law,
if indeed that is possible. Would that be a fair conclusion for this
round of testimony?
Mr. Moody. I don't know about that quote; I never saw it. But
this is my opinion of organized crime, sir
Mr. TORRICELLL Mr. Moody
Mr. Moody. If you will give me one second
Mr. TORRICELLL My concern would be, this is about the third
time we have raised a newspaper quote with you here today. I live
in politics, so I understand what it is like to be misquoted, but you
have a unique propensity. Did you not make this quote in the Bos-
ton Globe last week?
Mr. Moody. I don't even recall talking to the Boston Globe, sir;
I really don't.
Here's the way I look at organized crime. It is made up of a lot
of individual criminal entrepreneurs, and any time you have any
industry or any way that can generate money, especially one with
a lot of cash, you are always going to have certain individuals in-
volved in that, that want to try to penetrate that activity.
So if you have any t3rpe of gaming operation, there is always the
potential that you will have somebody in organized crime trying to
penetrate that, and that is why my recommendation here is that
strong regulatory agencies be set up to prevent that.
Mr. TORRICELLL Very good, Mr. Moody. Whether or not you af-
firm the quote, you certainly affirm the thought, and for that I am
appreciative. Thank you.
Mr. Richardson. I want to thank this panel. You have been very
patient, and you have provided a very interesting component for
this hearing.
We now would move on to our third panel: Our colleague from
New Jersey, the Honorable Robert Torricelli, U.S. Representative,
New Jersey Ninth District, and Mr. Donald Trump, chairman and
president. Trump Organization, from New York City.
I want to welcome our witnesses and would ask them to step for-
ward to the panel, and I would defer to our colleague from New
Jersey to introduce his colleague or to provide us with the first
round of testimony. Again, we have a very key issue here in this
committee, and we heard Senator Inouye talk about an October 19
decision on what the other body is doing.
162
I want to thank our colleague from New Jersey, and I would ask
him to please proceed.
STATEMENT OF HON. ROBERT G. TORRICELLI, A REPRESENT-
ATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. TORRICELLI. Thank you, Mr. Chairman, very much, and
thank you for this opportunity.
I am before you today to share both my thoughts with you on the
question of Indian gaming, an industry important to my State, the
ramifications of its problems, I think affecting all of us, and out of
concern that you would not recognize your next witness, I wanted
to introduce him to you this morning.
Mr. Chairman, for almost a century my State and many areas
of this country have been plagued with the scourge of organized
crime. It has been a parasite on businesses that have legitimately
attempted to operate in my State and, indeed, been an embarrass-
ment to many parts of our community.
After extraordinary efforts by the Federal Government and sig-
nificant changes in the law in recent years, by any accounts, we are
close to breaking the back of organized crime. But an extraordinary
irony is arising. Just as we find family after family that are being
broken, it is my own judgment that a drowning Mafia is being
tossed a lifeline for its own survival. Unregulated casino gaming
without provisions for the protection of the transfer of cash, with-
out provisions to do background checks or investigations, has
opened an enormous door for the survival of organized crime as we
know it.
Indeed, a multi-billion-dollar operation is already operating in
this country. Without question, some of the 175 operations in 26
States are already compromised. It can be no surprise that 22 seri-
ous allegations have already been made concerning some of these
operations.
Mr. Chairman, I think just for a moment it bears citing what
some of these allegations are. I will not attempt to name most of
them, but I will mention only a few.
The State of California, Barona Rancheria, Stewart Siegel admit-
ted to being a front for orgsinized crime. He had for a while headed
the tribe's management firm.
Cabazon Indian Tribe in California. After tribal Vice President
Fred Alvarez began complaining of money skimming, he mysteri-
ously was found dead with two friends.
The Rincon Indian Reservation in San Diego County, Sam
"Wings" Carlisi and eight other organized crime figures were in-
dicted in a 15-count indictment comprised of felony charges.
Jackson Rancheria: Anthony "Tumac" Accetturo managed a bingo
hall in 1985. He recently was convicted as being head of the
Lucchese organized crime family.
The State of Minnesota, the White Earth Tribe, Angelo Medure,
an alleged associate of the Pittsburgh organized crime figure, Car-
men Ricci, an alleged associate of New Jersey's Scarfo, who indeed
had attempted to penetrate New Jersey casino gaming in previous
years, has raised an investigation by law enforcement personnel.
163
In the State of New York, as I cited earlier, in the Mohawk
Tribe, an associate of John Grotti was arrested for shipping slot ma-
chines to the reservations.
And in my own State of New Jersey, the Ramapough Indians em-
ployed one Robert Frank as a consultant. He was later convicted,
along with Mr. Accetturo, of racketeering and extortion, of being
the head of New Jersey's Lucchese crime family.
Not anecdotes, Mr. Chairman, 22 States, 22 instances, where the
threat of organized crime is not a theory, it is not somebody's con-
spiracy, it is a reality of everyday life, and the question is, what
is this committee and what is Congress going to do to deal with the
problem?
Forty-nine governors and, indeed, the President of the United
States have all cited the current state of affairs cannot be allowed
to continue. This committee heard previously from Senator Inouye
claiming that negotiations with the governors would solve this
problem, but indeed a letter from the Grovernors Association that
Senator Inouye has received claims that those negotiations are not
adequate and they are not coming to a resolution and that indeed
this Congress must act.
Mr. Chairman, I know the good intentions of this Congress and
of this committee in trying to open opportunity for Indian Ameri-
cans. I do not come before you claiming that there are not problems
with Indian Americans. They are profound, and they are an embar-
rassment to each and every American. We have violated our word,
we have not respected the most basic human rights of our Native
Americans.
But this is no answer. We are doing no favor to Indian American
culture by destroying it by opening up Indian gaming as a pro-
tected industry for them. We are destroying their culture, we are
destroying their traditional leadership, by inviting corruption in an
industry without oversight, without basic controls for money laun-
dering.
Finally, Mr. Chairman, I make no apologies for the fact that,
aside from this being a concern for a variety of reasons with orga-
nized crime, with a concern for the destruction of Indian culture,
it is also an enormous concern for my State of New Jersey.
Six percent of the revenues of my State come from legitimate ca-
sino gaming. If indeed Americans, every American, comes to believe
that casino gaming in this country is compromised, that it is not
legitimate, that they cannot be treated fairly at their tables, then
indeed not only will Indian gaming suffer but Las Vegas and Atlan-
tic City, where we have made real and substantial efforts to ensure
the integrity of the industry, will also be compromised, and we will
lose the revenue, and so will the senior citizens, and the institu-
tions that are established for the disadvantaged that profit from
those taxes also suffer.
Mr. Chairman, I would at this point like to jdeld and introduce
Mr. DonEild Trump. The Trump Organization is by far the largest
investor in Atlantic City. It has invested not simply millions but in-
deed in excess of a billion dollars in the operations of legitimate ca-
sino gaming in Atlantic City.
This much I can say about Mr. Trump will distinguish him from
what you have heard today about Indian gaming. The State of New
164
Jersey knows Mr. Trump. He chose to do business in Atlantic City.
So we know who invests in his companies. We know who he buys
his supplies from. We know who works for him. We know who
walks in his casinos with cash, where it came from, and where it
went. We know a lot about Mr. Trump, and we know a lot about
everybody who attempted to come to Atlantic City.
From established organizations like the Hilton organization
through many lesser applicants, we rejected people because they
didn't meet our standards, and today we spend not simply millions
but many millions of dollars not simply with a few inspectors but
hundreds of inspectors, to make sure that the same people who I
cited as being involved in organized crime in Indian casinos
throughout this country will not be in the State of New Jersey. We
chased them out, we kept them out, they are out, and because they
are out of the State of New Jersey, they are seeking to take advan-
tage of Native Americans who want opportunity but who will be
victimized if we fail to protect them.
I do not want to see discrimination. I want no part of denying
opportunities to Native Americans. I come today not because but
in spite of those who would restrict their opportunities. It is simply
a question of assuring that they are safeguarded, like Atlantic City
and Las Vegas are safeguarded and indeed that we all are pro-
tected against these elements which we are so close to defeating in
our country.
With that, Mr. Chairman, if I could, I would like to yield to Mr.
Trump.
[Prepared statement of Mr. Torricelli follows:]
165
STATEMENT OF REP. ROBERT G. TORRICELLI
BEFORE THE HOUSE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
OCTOBER 5, 1993
I'd like to thank Chairman Richardson for holding today's
hearing and offering me the opportunity to testify.
It would be difficult to overstate the importance of today's
hearing not only to my home state of New Jersey, but to the country
as a whole. For what we have seen over the past five years -- the
proliferation of over 175 commercial Native American gaming
establishments in 26 states -- has enormous consequences to our
social fabric and our law enforcement capabilities.
What we have seen is the spread of de- regulated casino gaming
across the country without the citizens of the United States or
their elected representatives ever having made the decision to let
that happen. As a representative from one state that does allow
high stakes casinos, I believe that is the wrong way to proceed.
Gambling in New Jersey was a very difficult public policy
decision. It was made only after careful consideration by the
people of New Jersey and their elected officials, and it was
accompanied by an amendment to the state's Constitution. I believe
that decisions to allow casino gaming on Native American lands
should undergo the same public scrutiny and the same input from
affected communities.
But the purpose of today's hearing is not to discuss whether
we should allow the further proliferation of these casinos. The
purpose, instead, is to discuss whether these casinos are properly
regulated and whether they pose an irresistible invitation to
organized crime.
I believe that if one compares the regulation of casino gaming
in New Jersey with the regulation of tribal casinos, there is great
cause for concern.
Atlantic City's casinos operate under the most comprehensive
system of gaming regulations in the world. In developing its
regulations. New Jersey officials sought considerable input from
their counterparts in Nevada. We took what worked best in Las
Vegas and adopted it for our own, and we went above and beyond Las
Vegas' regulations where we thought it was necessary.
New Jersey spends $60 million each year to fund two government
agencies that enforce its regulations. Virtually all aspects of
casino operations, from who can be involved to the specific
dimensions of a chip, are strictly enforced.
166
In Atlantic City, background checks are conducted on any
individual who handles any money or who is involved directly in the
games. These checks are so thorough that the owners of the Hilton
Hotel chain were originally turned down for a license because the
company had some dealings that were not sufficiently explained to
state regulators.
New Jersey's casinos are also subject to the Bank Secrecy Act,
which requires meticulous reporting and recordkeeping of cash
transactions. In fact, every single dollar is accounted for and
reported back to the state.
Tribal casinos, on the other hand, are regulated by the tribes
themselves. The Federal Government is severely limited in the
amount of oversight it can provide, and the states can only monitor
the games subject to conditions laid out by a tribal-state compact.
The federal Indian Gaming Commission does have oversight
responsibilities for Class II gaming, such as bingo. But the
Commission has a $3 million budget and a staff of 24 to oversee
more than 100 class II Indian gaming operations across the country.
By contrast. New Jersey gaming regulators, who have responsibility
for 12 gaming operations in one city, have a $60 million budget and
985 employees.
Operators of tribal casinos are hired by the tribes
themselves, and often undergo no background investigations.
To illustrate how inadequate background checks can be, an
individual who headed the management firm for gaming operations on
the Barona Rancheria reseirvation in San Diego was twice turned down
for a license by the Nevada Gaming Control Board.
Furthermore, these casinos are not subject to the Bank Secrecy
Act. The danger of this situation has attracted the attention of
Treasury Secretary Bentsen, who has stated support for making
tribal casinos subject to the Act, and who wrote recently that
"without adequate recordkeeping, internal controls, and currency
reporting, Indian gaming has. . .potential to be an attractive target
for money laundering."
We are aiL.ady beginning to see the negative coi.-equences of
this loose regulation.
* In a report issued last December, the Inspector General for
the U.S. Interior Department said gaming revenues of over $12
million may have been improperly diverted from tribes to
operators and suppliers, principally because of theft and
mismanagement by contracted operators of gaming
establishments. In last Wednesday's Boston Globe, the author
of that report stated that "those places are sitting ducks for
fraud. "
167
* On the Rincon Reservation outside of San Diego, three
reputed mob leaders from Chicago and two local men were
convicted of conspiracy to launder money and defraud the
tribe.
* There have been repeated allegations of ties between
the Seminole Indian Tribe's bingo operation in Florida
and organized crime. Both the Interior Department and
the Attorney General of Florida have begun
investigations. And the FBI recently reported that ties
do indeed exist.
* The Cabazon tribe in California hired a member of a
local crime syndicate to run its casino. A tribal
official who accused the manager of skimming profits was
forced out of office and found dead two months later.
While the case has not yet been solved, investigators
believe that the murder was mob related.
* New Jersey's Ramapough Mountain Tribe signed a contract with
the Rory Management Company (RMC) . In return for spending
millions of dollars on lobbying efforts to secure federal
recognition for the tribe, RMC would be allowed to co-own and
operate a high stakes bingo hall and casino on tribal land.
Robert Frank, RMC's president, was sued less than a year later
for $6 million for alleged fraud and embezzlement scheme at a
California Indian bingo hall. He was subsequently the subject
of a criminal investigation for fraud, interstate money
laundering, and possible ties to organized crime.
* The FBI is currently investigating Angelo Medure, who
manages a casino for Minnesota's White Earth Band of Chippewa
Indians. Medure is a business associate of Henry Zottola, who
works for the Genovese crime family. It is suspected that
these men are laundering money for that crime family.
To accompany my written testimony, I am submitting for the
record 22 specific examples of organized crime infiltration or
corruption in tribal gaining that have been reported in the media.
Some will say that these are isolated instances, or that they
are only rumor and hearsay. But the fact is that in the five years
since passage of IGRA, tribal casinoshave opened in 26 states, and
reports of corruption or ties to organized crime have already
surfaced in 10 of them.
Anyone who honestly examines the manner in which tribal
casinos are currently managed and regulated -- and the ability of
organized crime networks to exploit this situation -- can only come
to the conclusion that what we are seeing today is the tip of the
iceberg. In fact, I am willing to submit that the only reason we
have not seen even more evidence of ties between organized crime
and tribal casinos is that no Federal regulatory apparatus exists
to police it or look into it.
168
I have introduced legislation -- HR 2287, the Gaming Integrity
and State Law Enforcement Act -- that will address these problems.
Similar legislation has been introduced by Senators Harry Reid and
Richard Bryan in the other body.
* HR 2287 will give states the right to reject forms of gaming
on tribal lands that are not allowed elsewhere in the state
and give states that do allow tribal gaming more power to
negotiate regulatory controls in gaming compacts.
* It will make it the responsibility of the Attorney General
of the United States to ensure that adequate background checks
are conducted on individuals affiliated with tribal casinos
before those individuals begin work at a casino.
* It will also address Secretary Bentsen's concerns by
making Indian gaming establishments subject to the same
financial reporting requirements as other businesses in
the United States.
Some have already branded my legislation as aji effort simply
to protect the economic interests of New Jersey and Nevada. I will
not deny that the economic health of Atlantic City's casinos is
crucial to the economic health of New Jersey, and that I have an
interest in looking out for my home state. But I would also point
to cosponsorship of this legislation by Members and Senators from
California, Wyoming, Florida, Arizona, Kentucky, Wisccns:n, New
York and New Hampshire.
Those with open minds will also see that this legislation
comes from people who know gaming, and who see better than anyone
else the dangers posed by loosely regulated casinos. We know that
Native Americans themselves want to prevent criminal elements from
infiltrating their operations. We also kjiow that gaming is the
most productive engine of economic development that many tribes
have ever experienced. We're simply trying to use our own
experience to better protect them.
We also understand better than anyone the stakes that are
involved if just one tribal casino is found to be under mob
i.i^luence, or if just one tribal casino is found guilty of fixing
gcimes . The ramifications would not be limited to tribal casinos,
but would reverberate throughout the entire industry. We cannot
allow a few unscrupulous individuals to destroy an industry that
has been built very carefully over several decades and that is the
economic lifeblood of two states.
169
It is now my pleasure to introduce Donald Trump, the owner of
three Atlantic City casinos, including the Taj Mahal, New Jersey's
largest .
Some will casually dismiss his testimony because of his
financial interests. But I urge you to listen carefully, because
Mr. Trump speaks as one who has seen first-hand the extent to which
proper regulation is a necessity to keep the games clean and
prevent the infiltration of organized crime. He also presents a
rare example of a businessman who, cognizant of the dangers posed
by lax oversight, actually seeks greater regulation by the Federal
Government .
Thank you, Mr. Chairman. I look forward to joining you to
question the additional panels scheduled for this morning.
MM
170
Arizona 1. Yavapai -Apache Tribe; Yavapai-Apache Reservation;
Phoenix, Arizona
1. Despite the fact that federal officials seized the
business records of Robert Sabes in July, 1993 for Sabes' alleged
ties to organized-crime figures, the Yavapai's have awarded him
preliminary approval to manage their proposed casino north of
Phoenix. (U.S. News and World Report, 8/23/93).
Arizona 2. Mohave-Apache Indian Community; Fort McDowell Gaming
Center; Fountain Hills, Arizona
1. William Fontana, a security consultant under investigation
by the FBI and the Mohave-Apache tribal police, for allegedly
bilking $700,000 from the Fort McDowell tribal gaming center has
faced similar charges twice in Arizona and once in Florida. He was
hired by the casino manager to investigate, Al Weiss, the casino's
security director in an effort to force Weiss out. ( The Arizona
Republic, 2/3/93)
California 1. Barona Rancheria; California
1. Stewart Siegel admitted to being a front for organized
crime; former head of the tribe's management firm. (Los Angeles
Times, 10/8/91) .
2. Emmett Munley, the head of a management firm that ran
gaming operations on the Barona Rancheria twice failed to get a
license from the Nevada Gaming Control Board. (Los Angeles Times,
10/8/91) .
3. During Congressional hearings in 1989, an anonymous
witness, who was later revealed to be Stewart Siegel, admitted that
he had cheated an Indian-gaming establishment out of $600,000 per
year by paying a chief $1,000 per week. (Los Angeles Times,
10/7/91)
Californiia 2. Cabazon Indian Tribe; Cabazon Reservation;
Southern California:
1. According to ' t.ie California State Attorney General's
Office, in May 1981, after tribal vice president Fred Alvarez began
complaining of money skimming, Alvarez and two friends were shot
dead. (Los Angeles Times, 10/8/91)
2. A poker room was managed by reputed organized crime figure
Rocco Zangari. (Los Angeles Times, 10/8/91)
3. In 1985, John Nichols a non-Indian advisor to the Cabazon
tribe was sentenced to four years in prison for trying to hire an
undercover policeman to serve as a hit man. (San Francisco
Chronicle, 9/5/91) .
171
California 3. Rincon Indian Reservation; San Diego County,
California
1. On January 10, 1992, the reputed acting boss of Chicago's
mafia, Sam "Wings" Carlisi, and eight other organized-crime figures
were indicted in a fifteen count indictment comprised of felony
charges for their attempts to take over gambling operations and
skim casino profits. (Proprietary to the United Press
International, January 27, 1992).
California 4. Jackson Rahcheria; Amador, California
1. James L. Williams, an associate of Anthony "Tumac"
Accetturo, managed a bingo hall in 1985. Accetturo was recently
convicted of being the head of the Luchese organized-crime family
of New York. (Los ANgeles Times, 10/8/91) . Williams was convicted
in 1987 of failing to pay taxes on some $300,000 he earned from
Indian bingo halls. (New Jersey Law Journal, 9/13/93); (.S. News
and World Report, 8/23/93) .
California 5. Mi-Wok Tribe; "Chicken Ranch"; Tolumne, California
1. In 1984, an arson fire swept through the home of and
incinerated an activist for the Mi-Wok tribe named Karl Mathiesen.
Mathiesen had complained that Indians were not being given fair
profits. Although there it was never proven that the crime was
tied to gaming, California Deputy Attorney General Rudolf Corona,
Jr. has stated that "someone wanted (Mathiesen) very dead." (Los
Angles Times, 10/8/91) .
California 6. Morongo Reservation, California
1. In 1984, the tribe sued an outsider for running an
unauthorized bingo on one member's land. Testimony later disclosed
that reputed crime figures Rocco Zangari and Tommy Marson
frequented the hall. (Los Angeles Times, 10/8/91).
California 7. Rvunsey Rancheria; California
■• A former tribal secretary was indicted for tax charges for
allegealy fleeing to Nevada with a Rolls i\oyce and $400,000 in
gaming proceeds. (Los Angeles Times, 10/7/91).
California 8. Soboba Reservation; Riverside, California
1. One Indian-gaming management firm was found to have
embezzzled $252,000 and another included a fugitive from the French
Connection Heroin case. (Los Angeles Times, 10/8/91).
172
California 9. Twenty-nine Palms Reservation; San Bernardino,
California
1. Wiretaps in 1987 overheard Chicago mobster Chris Petti
discussing a possible hotel-casino, although the deal never
materialized. (Los Angeles Times 10/8/91) .
California 10. Cloverdale and Hopeland Bands of Porno Indians;
Northern California
1. Angelo Medure, an alleged associate of a Pittsburgh crime
family plans to manage casinos for the Hopeland Band of Pomo
Indians in Northern California, the Cloverdale Pomo Indians in
Northern California. His involvement with the White Earth Tribe of
Minnesota has led to investigation by local law enforcement
officials. (U.S. News and World Report, 8/23/93).
Connecticut 1. Mashantuckett Pequot Indian Tribe; Foxwoods
Casino; Ledyard, Connecticut
1. Robert W. Werner, Connecticut's top gambling regulator,
complained that state police are not authorized to investigate
financial backers of Indian casinos; the Hartford Courant noted
that " as a reuslt, the state has been unable to conduct a full
investigation of the Malaysian company that has bankrolled the $60
million first phase of Foxwoods and much of the $142 million
expansion now under construction" (Hartford Courant, 5/27/93) .
2. The Courant reported that Werner also complained of "large
backlogs" created by an inefficient background-investigation
system." (Hartford Courant, 5/27/93)
3. Connecticut State Police suspect a gang from Boston of
theft of "several thousand dollars" from an electronic cash-
transferral system at the Foxwoods casino. (Hartford Courant,
January 19, 1993)
Florida 1. Miccosulcee Tribe; Miccosukee Indian Reservation;
Miami, Florida
1. Tamiani Partners approved a bingo-papei supply contract
with Frank Nannicola of Warren, Ohio. Nannicola is the son-in-law
of Charles Imburgia, whom the Pennsylvania Crime Control Commission
claims is a member of the Genovese organized-crime family from
Pittsburgh. The National Indian Gaming Commission has never
investigated Nannicola, the paper-supply concern run by Nannicola,
or Tamiani Partners. (U.S. News and World Rpeort, 8/23/93).
173
Florida 2. Seminole Tribe; Seminole Indian Reservations; Tampa and
Hollywood, Florida
1. Two independent investigations by the FBI and the
Department of Interior's Inspector General both concluded that the
management companies that run the tribe's bingo operations have
ties to organized crime. (The Blood Horse, January 30, 1993)
2. The Interior Department report indicated the tribe's
management contract includes no opportunity for the tribe to
maintain control over the management firms. The state has no
jurisdiction on reservations and the federal government will not
spend the resources to ensure adequate oversight. (The Tampa
Tribune, January 7, 1993)
Minnesota 1. White Earth Tribe; Shooting Star Casino; Mahnomen,
Minnesota
1. The White Earth tribe's dealing with Angelo Medure, an
alleged associate of Pittsburgh organized-crime figures, and Carmen
Ricci, an alleged associate of New Jersey's "Nicodemo Scarfo"
organized crime family, have raised concerns among citizens and
law-enforcement officials. (U.S. News and World Report, 8/23/93).
2. Angelo Medure, an alleged associate of the "Nicodemo
Scarfo" crime family also plans to manage casinos for the Hopeland
Band of Pomo Indians in Northern California, the Cloverdale Pomo
Indians in Northern California, and the Senaca-Cayuga Tribe in
Miami, Oklahoma in addition to the White Earth Tribe of Minnesota.
(U.S. News and World Report, 8/23/93).
Minnesota 2. Nett Lake Chippewa Tribe; Nett Lake Reservation;
Minnesota
1. The Nett Lake Chippewas of Minnesota, leased 172 slot
machines from a company it later discovered was owned by the non-
Indian casino manager and tribal attorney. As a result the tribe
paid $2.5 million dollars to rent machines that would have cost
$800,000 to purchase. (The Boston Globe, 9/29/1993)
Montana 1. Assiniboine and bouix Tribes; Fort Peck Reservation;
Wolf Point, Montana
1. The Assiniboine and Souix of Montana signed a contract to
build and manage a $10 million gaming/ retail complex with a
company that had no experience in construction or casino
management. $5 million of financing included "three instruments
made out in German, drawn on a Swiss bank account and payable to an
Italian national." (The Boston Globe, 9/29/93).
174
2. The Inspector General's report states "The international
financial arrangements indicate the need for constant scrutiny to
ensure that such arrangements are sound and protect the interests
of Indian tribes. (The Inspector General's report)
New York 1. Saint Regis Mohawk Tribe; Saint Regis Mohawk
Reservation; upstate New York
1. In 1990 an associate of John Gotti was arrested for
shipping slot machines to the reservation. (Los Angeles Times,
10/7/91) .
2. A casino — legal only because of a compact signed after
1991 -- opened there in July 1993.
Oklahoma 1. Seneca-Cayuga Tribe; Miami, Oklahoma
1. Angelo Medure, who is involved with operation in the
Seneca- Cayuga gambling hall, has has been under investigation for
his dealings with tribal casinos in California and Minnesota, and
for his connections to the Genovese crime family.
Wisconsin 1. Wisconsin Winnebago Nation; Winnebago Reservation;
Madison, WI
1. Under the management of Glenn Corrie, the Winnebago tribe
of Madison, Wisconsin lost $2,000,000 in illegal payments to Corrie
and cannot account for another $3,700,000 in casino revenue
intended for the tribe. (Star Tribune (Wisconsin), July 4, 1993)
2. The Inspector General's reports indicate that the tribe
saw its $2 million dollars in savings become $2.5 million in debt
over 18 months due to casino mismanagement. (The Boston Globe,
9/29/93)
New Jersey 1. Ramapough Mountain People; Ramapough "Reservation";
Bergen County, New Jersey
1. The Rampough Mountain ^3ople, a group currently under ^
consideration for federal recognition that plans to open a casino
in Northern New Jersey, employed Robert Frank as a "consultant"
until 1991. Frank is a longtime associate of Anthony "Tumac"
Accetturo, who has been involved extensively with Indian gaming
operations across the country. Accetturo was recently convicted
(in New Jersey) of racketeering, extortion, and being the head of
New York's "Luchese" organized-crime family. Frank also maintains
ties with James Williams, who was convicted in 1987 of failing to
pay taxes on some $300,000 he earned from indian gaming bingo
halls. (New Jersey Law Journal, 9/13/93); (U.S. News and World
Report, 8/23/93) .
175
Mr. Richardson. I thank my colleague.
Mr. Trump, please proceed, and welcome to this committee.
STATEMENT OF DONALD TRUMP, CHAIRMAN AND PRESIDENT,
TRUMP ORGANIZATION, NEW YORK, NY
Mr. Trump. Thank you very much, Mr. Chairman. It is an honor
to be here, and I appreciate the time.
I had a rather long and probably very boring speech drawn out,
and I have decided not to read this speech after having heard so
much this morning. It was politically correct, it was something that
was going to get me in no trouble whatsoever, but I just don't feel
it is appropriate to go through it.
I think that it is obvious from everything you have heard today
that organized crime is rampant, is rampant — I don't mean a little
bit — is rampant on the Indian reservations. People know it; people
talk about it.
I watched the FBI discussing the fact that they had virtually no
agents checking, and I just wondered to myself, I wonder what J.
Edgar Hoover would have said about this.
What is happening on the Indian reservations is known by the
Indians to a large extent. I don't believe anything is being done
about it. And, to be honest with you, I think if you knew some of
the characters that you are dealing with, I think they would be
afraid to do anything about it.
In Atlantic City and in Las Vegas we have the FBI, many, many
folks from the FBI, we have our own people, we have the U.S. at-
torneys, we have sheriffs, we have marshals, we have everything
watching every move.
As Congressman Torricelli said, they really know me better than
I know myself, everybody, from the Casino Control Commission all
the way up or down. It is really an incredible situation that I have
to go through in terms of checks. Every check I sign, every docu-
ment I sign is scrutinized by, not one, not two, but in many cases
three, four, and five different groups of people, and in the end I am
not saying that things can't be done wrong, I am not saying that
things can't happen, but people are going to get caught; they are
absolutely going to get caught.
I have witnessed so many different things, and I can't tell you.
We have an industry in Atlantic City that has contributed $2.5 bil-
lion to the Casino Revenue Fund. That is a fund set up for senior
citizens and the disabled. Two things can happen, and this is big
money. This is, 9.25 percent of every dollar gets sent to the senior
citizens and to the disabled in New Jersey and beyond, and beyond
in terms of groups of people.
If this continues as a threat, it is my opinion that it will blow,
it will blow sky high, it will be the biggest scandal ever or one of
the biggest scandals since Al Capone in terms of organized crime,
and it is going to destroy an industry that is a legitimate industry,
an industry that is watched carefully by everybody. This will be a
scandal. Congressman Miller, I believe, will be very embarrassed
by it, I believe a lot of you folks that are standing there, I believe
honestly knowing that what you say is perhaps not as correct as
you would like to make it sound. I believe that there is going to
be a lot of embarrassed and a lot of red faces.
176
But to sit here and listen as people are saying that there is no
organized crime, that there is no money laundering, that there is
no anything, and that an Indian chief is going to tell Joey Killer
to please get off his reservation is almost unbelievable to me.
I listen about sovereign nation, the great sovereign nation, and
yet $30 billion to all of the various programs was contributed to the
sovereign nation for education, for welfare, for this, for that.
I listened as to sovereign nation, and yet the sovereign nation
and the people of the sovereign nation have the right to vote in our
country.
I listen as to sovereign nation, all of the medical, all of the other
treaties.
I want to know, can Indians sign treaties with foreign nations?
Can they go and sign a treaty with Germany? The answer is no.
How is it a sovereign nation?
It is only a sovereign nation in that Indians don't have to pay
tax, and what you have — what you have is, you have a very inter-
esting dichotomy. We are paying $2.5 billion worth of tax. The Indi-
ans don't have to pay tax. Nobody is more for the Indians than
Donald Trump.
And you ask about competing. I love to compete. Nobody likes —
and I think many of you folks up there know for a fact that I love
to compete. But I like to compete on an equal footing. I am compet-
ing and paying hundreds of millions of dollars in tax. My so-
called — as you would call them — opponent — and they are not an op-
ponent— ^but my opponent is competing and paying no tax. It is not
a fair situation. It is not fair to the States.
If, in fact, Indian gaming were allowed in northern New Jersey,
the Fund for Senior Citizens would be totally destroyed, the fund
for medical care and all of the other uses that this tax money is
paid for would be totally destroyed, and I think that is a real big
problem.
And one other thing I might add. We talk about Indians like
gaming is going to be the salvation. You have a group of Indians
in Connecticut. I have heard 300, I have heard 400. It is a casino
that is far and away the most profitable in the world because,
again, they don't pay tax. Why don't they distribute some of the
funds to all of the other Indians throughout the United States that
don't have a location of Connecticut right next to New York City
and right next to Boston?
Why is it that the Indians — ^we talk about these 300 Indians
which, by the way, was rather recently formed — why don't they
make their contributions to all of the Indians? You have probably
a profit on that, I would estimate, of $400 or $500 million. This
goes to a total of about 300 to 400 Indians. Why don't we make
contributions? Why doesn't this money get taxed, and why doesn't
this money be distributed throughout the United States to Indians
who locationally can't have a reservation where you would have a
casino because the casino is too far away from the population?
So I listened to what has gone on today, and truly I am amazed,
and I am disappointed. I am disappointed as a citizen. When I have
to sit here and listen to people saying that everything is just
peachy-dory, it is not, folks. It is going to blow. It is just a question
177
of time, and when it blows you are going to have a lot of very em-
barrassed faces sitting right where you folks are sitting right now.
Thank you very much.
[Prepared statement of Mr. Trump follows:]
178
TESTIMONY
Of
DONALD TRUMP, PRESIDENT
TRUMP ORGANIZATION
Before
The
SUBCXDMMITTEE ON NATIVE AMERICAN AFFAIRS
October 5, 1993
9:30 a.m.
179
Good morning Mr. Chaimum and Members of the Committee. Thank you
for the privilege of appearing before you today on this important issue.
Thank you. Bob, for that warm introduction, and thank you for being here
with me tod^. Your presence clearly indicates the importance of this matter to ±e
people of New Jersey.
I'm Donald TVump. Tm from New York where I develop, restore and create
new prcpeities and hotels. As Bob Totricelli noted, I also operate three casinos in
Atlantic City under license from the State of New Jersey and tliat is why I am here
today. Those casinos have stockholders and bondholders other than myself. As
Chairman of the Board of these casinos, I represem their interests as weU.
Much has been said in recent weeks about the big casino interests - people
like Donald Thmip taking on America's native people. Trump and all the moneyed,
muscle crowd attacking minorities. That isn't the case at all. In a sense, this has
little to do with the Indians. Neither I nor my colleagues in the indtistry oppose the
right of our first countrymen to seek economic determinadon and to secure their
futures. As you know, many people in our industry are helping Indian tribes
accomplish that goaL
I am not here to quarrel with Indians. But I and others do have a quanel
with the federal government And when it comes time for a single citizen to stand
up to the power and resources of Washington, all of us, including Donald Trump,
are just members of John Q. Public. A little guy against the biggies.
180
But America is a great country and even little guys, in this case even Donald
Trump, have some rights. And states also have some rights in our constitutional
system. We believe that in this case the rights of Donald Trun^), the residents of
New Jersey and the state itself are quite synoiqaQous.
As stated, I operate three casinos in Atlantic Oty. Aaually, although a lot
of people seem to think I know little about the business, I am the largest
individual casino operator in the world. I say that modestly as you would expect
However, in New Jersey, I and my colleagues don't merely operate casinos
for our own fun and profit We are economic partners with the state. The first 9.25
percent of every dollar we take in goes to New Jersey - off the top - off our gross,
not our net Eight percent of that goes to support the Casino Revenue Fund (CRF).
This is a state program we fund which supports seniors and thr disabled. It allows
seniors to buy prescription drugs for $5.00, offsets their property taxes, helps reduce
their electricity bills and provides other services like home health care. It offers our
seniors and disabled both security and digniQr.
In 1992 New Jersey casinos provided $255 million to this fund. Since 1978
when Atlantic City's first casino opened, our industry has provided S2ii billion to the
CRF.
The next 1.25 percent of gross casino revenue goes to a state agency, the
Casino Reinvestment Development Authority (CRDA). We are the sole funding
source of that organization. Last year we provided $40 million to the CRDA which
invests these funds in public projects throughout New Jersey. Through 2009, it is
181
estimated the CRDA will invest $654 million in Atlantic City, $413 million in
southern New Jersey and $297 million in northern New Jersey. This money has and
will continue to bxiild housing, day care centers, senior citizen con^)lexes and
shopping centers in all of the state's urban areas. It's a lot of money, and it's for
worthwhile causes.
Some 75,000 New Jerseyans and their families are working because of our
business; more than 43,000 directly in Atlantic Oty. We employ well over half of
the city's entire work force. In 1992 alone we paid more than a billion dollars in
wages and benefits to our people.
More than $5 billion of investment, that's right $5 billion of private capital
has made Atlantic City the economic base of the entire southern half of New Jersey.
We represent over 4 percent of the state budget.
We have accomplished all this under the most restrictive regulatory
standards in the country. We are the most highly regulated business in any capacity
in any venue. We pay the state over $60 million annually for our own regulation.
That's ccnect • we pay to regulate ourselves although state regulation is separate
and apart from us and beyond reproach.
As I said, our regulation is stiff. Each of my businesses is relicensed on a
biannual basis. As of now, I must personally requalify each year. All key employees
must do so. This is no easy process. Every activity and transaction are checked by
the State Police. Some eighty pages of documenution; associations, personal and
business checks; family background; and resources. It is totally pervasive. Actually,
182
I am told that some of the owners of sports franchises in our country would not
qualify for licensure in New Jerse/i casino industry.
I can state without fear that we are solid corporate dtizeni operating a clean
and honest entertainment business. Both we and New Jersey are proud of this
record and rightfully so.
Do you wonder, therefore, why we are so deeply concerned, even paranoid,
that Indian tribe operations are not similarly regulated. Do you know what would
happen to our reputations, our businesses if organized crime gained a foothold in
any of the Indian operations. I am not suggesting that organized crime has done to
although there have been numerous articles in the press that this has happened. It
is the mere possibility that scares us. A scandal in any Indian casiiu) operation
would reilect on us, rub off on our industry. Our honesty, our integrity, our
reputations would be compromised at once. It is an old story - guilt by association.
Years of work down the drain. We know that Indian tribes want clean and honest
operations. However, we also know that people involved in advising some of the
tribes, those operating and funding certain of their operations, are not subject to the
strict licensing and qualifying regulations in place in New Jersey and other states.
Yes, we are concerned, very concerned. The federal government has unleashed a
process without regard to the economic or social consequences to the stau in which
the activity takes place.
However, I am not in law enforcement so I will let the law enforcement
people discuss these matters.
183
I am here to talk about what oould happen in New Jeney if this process were
applied there. I would like to trace for you what would happen to xis, our employees
and their families, oiu seniors and disabled if the federal govemmem luilaterally
detennined to recognize an Indian tribe in northern New Jersey near New York
Qty. Please note I used the word would; not what oould happen.
Pint of all, an Indian casino operation in northern New Jersey would be the
econoo:ic death knell to Atlantic City. Much of our market, which we and the state,
our economic partner, have worked hard to aeate and protect, would disappear.
No one will ride two hours in trafSc to do the same thing that they could do in
fifteen minutes or a half hour. We would lose jobs • a lot of them because casinos
would be forced to close in a dwindling market.
New Jersey's public investment in a new convention center, in airport
development would be seriously compromised. Millions spent on new infrastructure
and highway development would have been wasted. Atlantic City, even today, is a
state resource and treasure which would be immediately undermined.
Let's forget Donald Trump and the casino industry for a moment. What
about New Jerse/i citizens. Certainly the millions for seniors and the disabled and
reinvestment would decrease quite measurably. The money will not be replaced by
an Indian casino.
What about the state? Would New Jersey be able to assure itself that its
public policy of strict regulation would be maintained? Not to the extent that it now
controls the regulation of gaming in Atlantic Qty. Under existing lacws, no state has
184
prerogative over Indian gaming. Therefore, the state would be powerless to cany
out it& regulatory policy over these operations. It is quite a dichotomy. New Jersey,
which has prided itself as the state with the strictest form of casino regulation, could
be forced to accept lesser standards for Indian tribes operadng within its sute. Such
is the nature of State - bulian compact negotiationa where states are forced to
accept less than optimum regulatory measures out of fear that they will be sued by
Indian tribes for not negotiating in 'good faith.*
And what about worken. Did you know, for example, this week at the AFL-
CIO meeting in San Francisco that some of our largest unions, the Service Workers,
the Seafarers, the Operating Engineers and the Restaurant and Hotel Worken
joined to form the Riverboat and Indian Gaming Service Trade Council? The
purpose of the council is clear-cut • to protect workers. Do you know why? Because
federal laws, like the Taft-Hartley, like the jurisdiction of the National Labor
Relations Board do not apply. They also cease to exist at the tribal land doorstep.
At present, union worken even in states like New Jersey, would have no federally or
state protected rights or the ability to organize in casinos operated on tribal lands.
The unions hope to do something about this. They hope to gain the right to
recognition, the right to organize if they so choose. Quite frankly, I hope they have
better luck than we have had so far.
So gentlemen, the issue is really not Donald Trump and the moneyed casino
interests against various Indian tribes. The issue is whether our government in
recognizing the legitimate rights of our native Americans will simultaneously assure
that the rights of our state's own citizens, our workers, our senion and, yes, even
Donald Trump, are not bargained away or stomped upon in the process.
185
Tbat is the reaiOQ that n^ielf and otben are supporting Bob Torricelli's
legislation and also why I filed a lawsuit against the Seaetaiy of the Interior. I'm a
citizen, and I believe it is nqr right to protect thyself and my companies when the
government reftiaes to do so.
Thank you.
186
Mr. Richardson. Thank you.
Mr. Trump, let me start out by exercising the prerogative of the
chair in asking the first question. You mentioned the words "ramp-
ant organized crime infiltration on Indian gaming."
Mr. Trump. Yes, sir.
Mr. Richardson. Have you presented this evidence to the FBI
or to this committee? Do you have documentation of that?
Mr. Trump. Well what I have is, I have many, many instances
of events one after another — organized crime figures, killings,
deaths, laundering of money. I mean I could read them to you.
Frankly, this would have been much more interesting to read than
my own testimony. That is why I decided not to read my testimony.
Wisconsin, White Earth tribe, all the Apache Tribe — all instances
one afl:er another. I have more instances here. You folks know that.
I really believe you know that, and I could give you any docu-
mentation I have.
Now, this is without having people watching. This is with listen-
ing to an FBI person sajdng that he has got no men — no men,
zero — assigned to the reservation.
At the Taj Mahal, I spent more money on my security and my
security systems than most Indians spend in building their entire
casino, and I will tell you, without that kind of security equipment
and that surveillance equipment and the numbers of people, you
cannot police it.
But what you really also need is, you need Grovemment help.
When the bad guys come in, when the tough guys come in, you
have got to have somebody behind you. There is nobody behind
these people. There is nobody there. There is nobody there to help,
and when the tough guys go up and they say what they want, I
truly don't believe — I truly do not believe, and I don't believe you
believe, that anybody is going to do anything about it. They are
going to get ever3^hing they want.
Mr. Richardson. Well, Mr. Trump, I don't agree with that. Let
me just say, we want your evidence. Now you have detailed that
in your opening statement. We want to investigate this. This com-
mittee is not trying to cover anj^hing up. We are interested in this
issue.
You have basically stated that the problem seems to be that the
FBI doesn't have any people, or is that correct?
Mr. Trump. I think it is far beyond that. I think that people have
got paper bags over their faces and nobody's looking. Everybody, it
seems to me, from even just a common sense standpoint, knows
what is going on. Everybody knows what is going on.
I can tell you this. In New Jersey you have what is called a black
list, or a list of people that we are not allowed to do business with.
These people were a constant source of irritation. I can supply the
list of names if you would like the list of names. But it was a large
list of names, and these were not very good people, and some of
them were plenty rough. These people were a constant irritation,
a constant problem. We weren't supposed to, but they were always
trying to get in, trying to be down there, trying to do whatever they
do, and it was a constant source.
One of my executives told me the other day, "The only good thing
about the Indian reservation is that we don't see these people any
187
more, we don't see them any more." Now why don't we see them?
I guess because they have a lot easier fish, I don't know, but we
don't see them any more. So it makes our job a little bit easier.
Mr. TORRICELLI. Mr. Chairman?
Mr. Richardson. Mr. Torricelli.
Mr. Torricelli. May I address your question? I was a young
lawyer in our governor's office in New Jersey when we legalized ca-
sino gaming, and I think that experience will help answer your
question.
We were extraordinarily naive. We passed good laws to keep or-
ganized crime out of the casinos, and I am proud of what we did.
A year hadn't gone by when they were monopolizing vending ma-
chines, and then laundry operations. You will never find the pres-
ence of organized crime without an intense effort.
It is said there are none so blind as those who will not see. I
didn't come here to embarrass the FBI today in my questioning. It
was simply to point out that this will take a concerted effort. Mr.
Trump may, by chance, come upon a name, as I have in these 22
instances, from the popular media, but I will assure you, if the pop-
ular media can find 22 States with organized crime involvement in
a cursory look, a dedicated effort by the FBI is going to find some-
thing more substantial.
I first came to this issue in an interesting way. I heard constitu-
ents of mine were raising money to create a management company
in South Dakota to run an Indian bingo hall. I knew who they
were, and I knew they were connected, and I got curious with the
issue. That case isn't here, never been written about, nobody even
knows about it. But this will not come from citizens rushing to the
FBI, it will come because we have a concerted effort to establish
laws, to regulate, and then to fine.
Mr. Richardson. I agree with my colleague.
Let me ask my last question to Mr. Trump.
Mr. Trump. Yes, sir.
Mr. Richardson. Did you submit this list to the FBI at any
time?
Mr. Trump. This was a list that was given to me by lawyers of
various things that are currently going on and investigations and,
by the way, convictions, many convictions on the list.
I am not a law enforcement officer. I am not supposed to be going
around checking Indian reservations. That is what you have the
FBI for, and they are very capable, the most capable. But that is
not my job. My job is to come here and tell you that from a stand-
ard of the largest casino operator in the world, which I am, I will
tell you that there is no way the Indian gaming is going to be con-
trolled and not be totally taken advantage and, in my opinion, to-
tally taken over in almost every instance, totally taken over, by the
mob. There is no way that the Indians are going to protect them-
selves from the mob. There is no way.
I think most of you people sitting up there honestly believe that.
I don't know that that is going to affect your judgment, but I be-
lieve that you honestly believe that.
From a common sense standpoint, from a practical standpoint,
there is no way the Indians are going to protect themselves from
the mob.
188
Mr. Richardson. But we have no evidence that the FBI has
checked any of the 22 instances out,
Mr. Trump. You can't have evidence when the FBI doesn't have
one man assigned to Indian gaming. How can you have evidence?
That is exactly the point. You need armies of people, armies of peo-
ple to check. Every check that they have written, you have got to
check those checks. You have got to see who is supplying the meat,
who is supplying the potatoes, who is supplying the potato chips.
You have got to check every supplier going into that Indian res-
ervation.
The checking is a joke. The checking is a joke, and you have got
to do something because this will be the biggest crime problem in
this country's history, in my opinion.
Mr. Richardson. Let me just conclude by making a formal re-
quest to you, Mr. Trump, that you provide this committee with all
the available data, documentation, that you and my colleague have
discussed today.
Mr. Trump. It would be an honor. Thank you.
[The information follows:]
189
October 25, 1993
The Honorable Bill Richardson
Chairman, Native American Affairs Subcommittee
U.S. House of Representatives
2349 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Richardson,
In the recent hearing of the Native American Subcommittee of the House Natural
Resources Committee, Chairman Miller rep>-atcdl> chal'enged me to put forward evidence
of organized crime involvement in the Indian j^aming industrj'.
I am enclosing a list of 13 examples of jjcrious organized crime involvement in Indian
reservation casinos many of which were widely reported in the press. The list includes the
following incidents:
* Barona Rancheria; California
Stewart Siegel admitted to being a front for organized crime;
former head of the tribe's management firm.
Exhibit A (Los Angeles Times. 10/8/91).
Emmett Munley, the head of a manngenienl firm that ran
gaming operations t^l'icL• ".:i!i(' '.•: -'ct a license from the Nevada
Gaming Control Board.
Exhibit A (Los Angeles Times, 10/8/91).
During Congressional hearings in 1989, an anonymous witness,
who was later revealed to be Stewart Siegel, admitted that he
had cheated an Indian gaming establishment out of $600,000
per year by paying a Ci'.Ief $1,000 per week.
Exhibit B (Los Angeles Times, 10/7/91).
THE TRUMP ORGANIZATION
725 RFTH AVENUE 'NEW YORK, IM.Y. 10022 212 •832 '2000 TELEX '427715
84-760 O - 94 - 7
190
Cabazon Indian Tribe: Cabazon Reservation;
Southern California
According to the California State Attorney General's Office, in May 1981,
after tribal Vice President Fred Alvarez began complaining of money
skimming, Alvarez and two friends were shot dead.
Exhibit A (Los Angeles Times, 10/8/91).
A poker room was managed by reputed organized crime figure
Rocco Zangari.
Exhibit A (Los Angeles Times, 10/8/91).
In 1985, John Nichols a non-Indian advisor to the Cabazon
Tribe was sentenced to four years in prison for trying to hire
an undercover policeman to serve as a hit man.
Exhibit C (San Francisco Chronicle, 9/5/91).
Jackson Rancheria: Amador. California
James L. Williams, an associate of Anthony "Tumac"
Accetturo, managed a bingo hall in 1985. Accetturo was
recently convicted of being the head of the Luchese organized
crime family of New York.
Exhibit A (Los Angeles Times, 10/8/91).
Williams was convicted in 1987 of failing to pay taxes on some
$300,000 he earned from Indian bingo halls.
Exhibit D (New Jersey Law Journal, 9/13/93);
Exhibit E (U.S. News and World Report, 8/23/93).
Miccosukee Tribe; Miccosukee Indian Reservation;
Miami. Florida
Tamiani Partners approved a bingo-paper-supply contract with
Frank Nannicola of Warren, Ohio. Nannicola is the son-in-law
of Charles Iniburgia, v»hom the Pennsylvania Crime Control
Commission claims is a member of the Genovese organized
crime family from Pittsburgh. The National Indian Gaming
Commission has never investigated Nannicola, the paper-supply
concern run by Nannicola, or Tamiani Partners.
Exhibit E (U.S. News and World Report, 8/23/93).
191
* Mi-Wok Tribe: "Chicken Ranch": Toliimne. California
In 1984, an arson fire swept through the home of and
incinerated an activist for the Mi-Wok Tribe name Karl
Mathiesen. Mathiesen had complained that Indians were not
being given fair profits. Although it was never proven that the
crime was tied to gaming, California Deputy Attorney General
Rudolf Corona, Jr. has stated "someone wanted [Mathiesen]
very dead."
Exhibit A (Los Angeles Times, 10/8/91).
* Morongo Reservation: California
In 1984 the tribe sued an outsider for running an unauthorized
bingo on one member's land. Testimony later disclosed that
reputed crime figures Rocco Zangari and Tommy Marson
frequented the hall.
Exhibit A (Los Angeles Times, 10/8/91).
Ramapough Mountain People; Ramaoough "Reservation';
Bergen County. New Jersey
The Ramapough Mountain People, a group currently under
consideration for a federal recognition that plans to open a
casino in Northern New Jersey, employed Robert Frank as a
"consultant" until 1991. Frank is a longtime associate of
Anthony "Tumac" Accetturo, who has been involved
extensively with Indian gaming operations across the country.
Accetturo was recently convicted (in New Jersey) of
racketeering, extortion, and being the head of New York's
"Luchese" organized crime family. Frank also maintains ties
with James Williams, who was convicted in 1987 of failing to
pay taxes on some $300,000 he earned from Indian bingo halls.
Exhibit D (New Jersey Law Journal 9/13/93);
Exhibit E (U.S. News and World Report, 8/23/93).
Rincon Indian Reservation; San Diego County.
California
On January 10, 1992 the reputed acting boss of Chicago's
mafia, Sam "Wings" Carlisi, and eight other organized crime
figures were indicted in a fifteen-count indictment comprised
of felony charges for their attempts to take over gambling
operations and skim casino profits.
Exhibit F (Proprietary to the United Press International, 1/27/92).
192
Saint Regis Mohawk Tribe; Saint Regis Mohawk
Reservation; upstate New York
In 1990 an associate of John Gotti was arrested fof shipping
slot machines to the reservation.
Exhibit B (Los Angeles Times, 10/7/91).
A casino - legal only bec;iuse of a compact signed after 1991
— opened there in July 1993.
Soboba Reservation; Riverside California
One Indian gaming management lirm was found to have
embezzled $252,000 and another included a fugitive from the
French Connection Heroin case.
Exhibit A (Los Angeles Times, 10/8/9}).
White Earth Tribe; Shooting Star Casino; Mahnomen,
Minnesota
The White Earth Tribe's dealings with Angelo Medure, an
alleged associate of Pittsburgh organized crime figures, and
Carmen Ricci, an alleged associate of New Jersey's "Nicodemo
Scarfo" organized crime family, have raised concerns among
citizens and law enforcement officials.
Exhibit E (U.S. News and World Report, 8/23/93).
Medure also plans to manage casinos for the Hopeland Band of
Pomo Indians in Northern California, and the Senaca-Cayuga
Tribe in Miami, Oklahoma.
Exhibit E (U.S. News and World Report, 8/23/93).
Wisconsin Winnebago Nation; Winnebago Reservation;
Minnesota
Under the management of Glenn Corrie, the Winnebago Tribe
of Madison, Wisconsin losl $2,000,000 in illegal payments to
Corrie and cannot account lor auother $3,700,000 in casino
revenue intended for the tribe.
Exhibit G (Star Tribune, Wisconsin, 7/4/93).
193
* Yavapai-Apache Tribe; Yavapai-Aptiche Reservation;
Phoenix. Arizona
Despite the fact that federal officials seized the business records
of Robert Sabes' in July 1993 for Sabes' alleged ties to
organized crime figures, the Yavapai's have awarded him
preliminary approval to manage their proposed casino north of
Phoenix.
Exhibit E (U.S. Ne>vs and World Report, 8/23/93).
All of these incidents were found despite tlie fact that the F.B.I. , per the testimony
of Agent Jim E. Moody (Section Chief, Organized Crime/Drug Operations of the Criminal
Investigative Division of the F.B.I.) at your hearings, had no agents assigned to the Indian
reservations.
I know some will argue that many of these s frious situations took place before the
enactment of the 1988 Indian Gaming Act. However, as I am sure you are aware, the
Inspector General of the National Indian Gaming Commission recently reported that the
1988 Act is not being enforced.
Consequently, there is every reason to believe that organized crime involvement in
Indian casinos will continue until government regulation and oversight is put in place to
insure the integrity of those individuals involved in Indian gaming, and until Indian
reservations are subject to the same Banking Secrecy and Currency Transaction regulations
and taxation that the rest of the casino industry in the rest of the United States are subject
to.
Sincerelv
Donald J. Trump
194
APPENDIX TO MEMORANDA DATED 2/24/93:
General comments in the media regarding the lack of
effective law enforcement efforts to prevent organized
crime infiltration of Indiem gaming operations.
Specific examples of organized crime infiltration into
Indian geuning operations: media reports
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit 6
Los Angeles Times 10/08/91
Los Angeles Times 10/07/91
San Francisco Chronicle 9/05/91
New Jersey Law Journal 9/13/93
U.S. News and World Report 8/23/93
Proprietary to the United Press
International 1/27/92
Star Tribune
7/04/93
195
6TH STORY Of Level 1 printed in FULL format.
Copyright 1991 The Times Mirror Company
Los Angeles Times
October 8, 1991, Tuesday, Home Edition
SECTION: Part A; Page 1; Column 5; Metro Desk
LENGTH: 3667 words '
HEADLINE: TRIBE HITS JACKPOT WITH ITS GAMBLING OPERATION;
INDIANS: LED BY WELFARE MOTHER, CLAN MEMBERS TAKE BACK BUSINESS FROM OUTSIDERS
AND TRANSFORM THEIR LIVES.
SERIES: THE INDIAN'S GAMBLE: Tribal Economies Are Banking on a Billion-Dollar
Gambling Industry. Third in a five-part series. Next: Amid confusion among
regulators, tribes embrace slot-type gambling machines.
BYLINE: By PAUL LIEBERMAN, TIMES STAFF WRITER
DATELINE: SYCUAN RESERVATION, Calif.
BODY :
Anna Sandoval remembers the low point as the day she trudged 10 miles to El
Cajon, a Mission Indian on welfare looking for milk for her five children.
Passing the wooden shacks with outhouses on the rocky hillsides of her
reservation, she prayed for deliverance of her people.
"I said, 'God, what can you do to help us?' " she recalled.
Two decades later, when the bingo came, the first thing she did was build a
new church.
Then came the houses. Sprouting on the hillsides were 29 Spanish-style home
rivaling those of any suburban subdivision.
Built nearby were a health clinic and firehouse designed to save lives of
Indians and non-Indians alike throughout the Dehesa Valley in eastern San Dieg
County.
And last November, Sandoval -- by then a fixture as tribal chairman —
dedicated a new 68 , 000-square-foot Sycuan Gaming Center, a sparkling complex
reminiscent of the Vegas Strip with a 1,500-seat bingo parlor, 520-seat
off-track betting "theater" and sunken 3 5-table poker area overlooked by a
restaurant, bar and gift shop.
Sycuan -- a square mile of wasteland where the government dumped a few Indi;
families a century ago -- had become one of the great success stories of Indiai
gambling, up there with the San Manuel band in San Bernardino, the Seminoles ii
Florida and the Shakopee Sioux in Minnesota.
There is a grim underside, to be sure, to the industry that in one decade h.
come to dominate Indian economies: reservations left with empty bingo halls,
victimized by Mafia infiltration, devastated by internal battles. For the
majority, the alluring promise of gambling has not been realized. It's been a
marginal moneymaker, an occasional source of jobs and trickle of profits.
196
1991 Los Angeles Times, October 8, 1991
But some have prospered. In California, for example, gambling has brought
clear economic gains to a half dozen of the state's 96 Indian communities.
Reservations once derided as blights on the surrounding area now hire their
non-Indian neighbors. Tribes that once looked for charity hand it out. Familie
that lacked indoor plumbing have satellite dishes in their back yards.
Even more significant, perhaps, are the changed lives: Philip Knight freed
from picking sugar beets to become full-time chief executive of the Rumsey
Rancheria; the children at San Manuel rejoicing at receiving bonuses for good
grades from kindergarten through college; and John Welmas, once sinking into
cocaine addiction, now sober and running a $400 , 000-a-year business feeding
gamblers at the Cabazon Reservation.
"If it wasn't for the bingo," he said, "I probably wouldn't be around today
Why have some reservations made it while others have become casualties?
A prime location never hurts — proximity to a Minneapolis or San Diego. Go
management is a must. But equally essential is political stability, particular
leadership able to maneuver around the trapdoors that doom many tribes.
This was difficult to find in California, where Indians were scattered on
small plots. Few groups had the traditions of strong government seen among the
great Indian nations elsewhere.
While the Oklahoma Creeks had a two-house legislature and volumes of tribal
law, politics here was of the extended family variety. One clan battled anothe
for control of sewer hookups, housing funds — or bingo profits. Unscrupulous
promoters could play one faction against another, offering gifts, jobs or cash
"It's much like if you feed fish," said David W. Pen, a Bodega Mi-Wok who
teaches anthropology at Cal State Sonoma. "If you have a small area and throw
a crumb, the crumb disappears quickly. And what you have is people after each
other in the hope that the crumb is still there."
"Infighting, power and greed," was the way Anna Sandoval put it. "You put
them all together and they'll destroy you."
They never destroyed her. But after she wound up in the grandest home in
Indian country, a Cadillac in the driveway, they did put a bittersweet ending
what should have been her moment of triumph.
Sycuan (pronounced SICK — wan) , needed crumbs — anything — when she was
elected chairman in 1972. A short, stout woman with an air of confidence, she
became the undisputed leader, the object of "a mother complex or whatever," sa
Jim Trant, the non-Indian development expert she brought in as a consultant in
1983.
Even then, the reservation remained "largely neglected," a government surve-
said. The average adult had a sixth-grade education. The only ccnmunal
structures were a century-old Catholic church, reflecting their heritage as
Kumeyaay Mission Indians, and a cinder-block meeting hall.
197
1991 Los Angeles Times, October 8, 1991
The bingo hall would dwarf those. It was proposed in 1983 by Pan American
International, a company that ran one of the pioneering Seminole halls in
Florida and was looking to branch out to reservations coast to coast.
When tribe members worried about the influx of strangers, Sandoval suggeste
a construction site in a corner of the reservation — which happened to fall 9
on her property and that of another member. "I said, 'We can put it on my land
" she recalled.
She'd get a larger share of the hassle — traffic right by her home — but
also of the rental, which was based on profits. If the place prospered, so wou
she. "They got mad about it later," she said of her fellow Indians.
At the time, however, who knew what would become of bingo? Worried it could
disappear any day, Sandoval rolled tortillas in her kitchen and sold them to t
players.
Indeed, it was no overnight success.
Within a year, the hall was raided by San Diego County sheriff's deputies,
who said an upstairs lounge featured illegal casino games. Court decisions had
affirmed Indians' right to offer high-stakes versions of any gambling legal in
state — then basically bingo and poker in California. At Sycuan, though, a ga:
dubbed "bingo-jack" was being played at what were "obviously blackjack tables,
then-Sheriff John Duffy declared.
As late as 1987, testifying before the U.S. Senate Select Committee on Indi
Affairs, Duffy distributed photos of "dilapidated conditions" at Sycuan to
illustrate the failure of Indian gambling. "Reservations themselves . . . ha'
not profited," he said.
Sandoval was hearing similar criticism from her people.
Tribe members received only small payments, $300 in the summer and at
Christmas. "They promised us a lot of things, and I haven't seen nothing yet,"
one elder griped.
The problem, Trant said, was that while the tribe was supposed to get 55% o
the net, Pan Am reported little profit.
There was grumbling from another direction as well. An Indian activist from
Arizona, Dineh Eagle, rallied six elders to write their congressman asking to
have "our reservation restored to our old ways." They accused Sandoval of bein
part of "a money oriented cligue" ruining the place.
Elsewhere, such factionalism was paralyzing. Here, Sandoval obtained a cour-
order barring Eagle from the reservation. "She was just stirring them up," the
chairwoman recalled.
"Anna? If she likes you she's a great person. If she doesn't like you, stay
out of her way," said Kenny Meza, then chairman of the nearby Jamul Reservatioi
By the end of 1987, Sycuan made its big move: Declaring Pan Am in violation
of a tribal licensing ordinance, the Tribal Council ordered the company off tht
reservation.
198
1991 Los Angeles Times, October 8, 1991
While the action was fought in court, Sycuan eventually prevailing, tribe
members ran the bingo themselves — profitably. "The next month ... we had
about $300,000 to distribute," Trant said.
In 1989, Sycuan was among the first reservations to take advantage of the
national Indian Gaming Regulatory Act by negotiating a "compact" with the stat
to add off -track betting to its mix of games.
To direct the expansion, Sycuan didn't pick the promoters regularly making
pitches to Indians. Trant found an Arizona-based partnership. First Astri Corp
whose background was in real estate and entertainment.
Whereas some tribes allowed outside managers to hand them prof it-and- loss
statements, Sandoval insisted the Indians count the chips themselves.
"When they come in and say 'We want to help you, do this for you,' that's
bull," she said. "They're here for money, not because they want to help the
Indians. "
This year, with $30 million in betting on horse races alone, the tribe
expects to clear $4 million. But that estimate is conservative — the Indians
received a check for $600,000 one month recently.
The Sycuan Gaming Center bears little resemblance to unadorned aluminum or
cinder-block bingo halls elsewhere. It has a Southwest look, sand-colored with
peach accents, and an entryway with skylights and mirrored ceiling. You drive
and a valet parks your car.
People start coning at 9:30 a.m. for "Wake Up Action Bingo." There's
"matinee" bingo also, then conventional evening sessions.
While women are the mainstay of bingo, men are drawn by the plush poker
parlor and off-track betting. Showing races on a 20-foot screen, the casino dr
$150,000 in bets for the Kentucky Derby alone, the tribe keeping 2.3% of the
handle.
With 600 workers, Sycuan is one of the largest employers in east San Diego
County. And with nearly 1 million visitors expected this year, marketing
director Fritz Opel, a former Disney executive, has a motto: "Why go to Vegas
when you can cone out to Sycuan?"
For years, the Indians were the objects of complaints about run-down
conditions, drunkenness and the like.
Their problems with the surrounding community are very different when they
run the most successful business around.
Now neighbors complain about traffic and overdevelopment. Some look cynical.
at Indian gambling as "people trying to get away with something, rather than
accord them the dignity they deserve as governments trying to do good for thei.
people," said Jerry Levine, attorney for the San Manuel Reservation in San
Bernardino County.
That's why the Sycuan Fire Department was so important. With an ambulance,
two firetrucks and 13 employees, it began answering calls throughout the
199
1991 Los Angeles Times, October 8, 1991
Dehesa Valley, where residents previously might wait 30 minutes for an ambulan
from El Cajon.
"Had the tribe offered this in any formal manner to the community, it
probably would not have been accepted, just because of jealousy, resistance,"
Trant said.
The tribe also sponsors a Little League team (the Sycuan Bandits) and bough
computers for a nearby elementary school .
Other bands similarly have learned the art of public relations. The Seminol
have made campaign contributions to Florida state legislators and given bingo
proceeds to Jerry Lewis' muscular dystrophy telethon. The Shakopee Sioux gave
$78,000 to blacktop a road in nearby Prior Lake, Minn.
But the Shakopee chairman, Leonard Prescott, is one of many tribal official
under pressure to use gambling revenues — first and foremost — to take care
public relations at home.
Prescott faces tumultuous reservation politics. After disputes with a rival I
faction escalated into fighting at one meeting, he hired 20 off-duty policemen ■
to keep peace. I
So while the Shakopees have put in new sewers and homes, Prescott uses 65% i
the gambling profits to keep constituents happy. Some families receive $80,000 |
year.
Host Indian leaders agree that such "per cap" payments are not ideal use of i
the money because the community may be left with few permanent improvements. j
"Politically, it's a real temptation," said Jana McKeag, an Oklahoma Cherok \
recently appointed to the Indian Gaming Commission. "But it's short-term."
At Sycuan, Sandoval felt secure enough -to take the long-term view.
Only 30% of the tribe's revenue is "per capped," adults in the 96-member !
tribe getting $6,000 a year. Another 25% goes into trust funds and insurance - ■
full health and $250,000 life policies for everyone. The rest is used for
reservation projects.
The houses were a startling contrast to the boxlike government homes seen o •
most reservations. "We wanted something better," said tribal Vice Chairman Han ;
Murphy, who got a 2 , 600-square-foot home with a "million-dollar view." ;
Now Sycuan is one of the few tribes — "the real smart ones," noted gamblin |
expert I. Nelson Rose — using gambling to rise above it. It's looking to inve I
profits in businesses that, unlike gambling, won't be subject to whims of cour •
or state legislatures, and that won't attract the shady outsiders drawn to j
casinos. !
On the drawing board is an all-suite hotel to capitalize not only on j
gamblers, but golfers using Singing Hills Country Club up the road. Also planni !
is a $7-million senior citizens housing project, whose 283 units will be rentei j
mostly to non-Indians, Trant said. L
200
1991 Los Angeles Times, October 8, 1991
There's talk as well of a vineyard to produce wine — with the Sycuan label
of course.
In Florida, the Seminoles already have invested in land, an orchard and a
hotel.
In Indio, the tiny Cabazon band is partner in a SlSO-million plant to produ
power from agricultural waste and has plans for a 1,300-home real estate tract :
Cabazon, which had to survive organized crime infiltration in the early 198 ;
and still suffers from fierce internal feuds, has not made Sycuan' s gambling j
profits and only months ago paved its first road. But the new projects, joint |
ventures with outside investors, would be impossible if the tribe had not
managed to keep its bingo and card room going, according to Mark Nichols, |
Cabazon' s non-Indian chief executive officer. |
"We had to be established as a fighting entity," Michols said. "Without ';
gambling revenue, (the Indians) would not be dealing from a position of j
respect. " i
Cabazon has big plans for its gambling facilities, too. It hopes to expand
55,000 square feet, one of several tribes looking to challenge the
king-of-the-hill status held by the Sycuan facility unveiled last November.
"Sycuan is the model," said the manager of another nearby Indian gambling
hall. Agreed George Forman, a former government attorney who works vith many
tribes: ''It's what Indian gaming should be."
But just two weeks after the grand opening, events took a turn for Sycuan' s
matriarch.
Last Dec. 10, Sandoval's reign as chairman ended in a shocking election
upset. Dan Tucker, then vice-chairman, beat her by three votes.
Tucker declared his win a mandate for "more working together."
"Anna," he noted, "did a lot of stuff on her own."
He is of a new, more assimilated generation. Just 39, he rose from box boy
become manager of a Ralphs supermarket. Whereas Sandoval likes to travel to
traditional Indian pow-wows, his hobbies are playing golf and attending footba
games.
While Tucker pledged to turn the old church into a museum to "our heritage,
no one mistook him for anything other than a modern-day managerial sort.
Another of his projects? He'd like the Sycuan Band of Mission Indians to
sponsor a golf tournament at Singing Hills Country Club.
Anna Sandoval knew she'd alienated some tribe members by running things "wi
an iron hand." But she couldn't hide the hurt.
"I don't know if they appreciated what I did," she said. "No one has ever
come to me and said 'Thank you, Anna.' "
201
1991 Los Angeles Times, October 8, 1991
She retreated to her new hone. Dubbed the "house on the hill," it was the
talk of reservations hundreds of miles away, with its imposing, tower-like frc
— a kiva, actually, a round room for meditation or prayer.
She hardly left office empty-handed: The rent for use of her land and pensi
from her chairman's job total well over 3100,000 a year, according to tribal
officials. Outside the land-rich Agua Caliente in Palm Springs, she may be the
wealthiest Indian in California.
But the onetime welfare mother wondered whether it all was worth it.
While her new microwave worked fine, she sometimes found herself thinking,
"Boy, it would be nice to have a wood stove."
She thought back to the old days, when Sycuan survived on fried bread and
acorn mush. While it was hard to be an Indian then, you felt free on the "res.
There wasn't all this materialism. All this commotion.
She wasn't about to give up the money, of course, nor the house, nor the
Cadillac. But a thought came to her: "You have to give up something to get
something. "
Indian Gambling in California
Two dozen of California's 96 reservations and tiny rancherias have
experimented with gambling, producing several showplaces of industry — and so
of its worst scandals, including two unsolved murders.
1) BARONA RANCHERIA, San Diego (County) : Bingo manager Stewart Siegel was
caught fixing games in 1986, then admitted being a front for organized crime.
The current management firm is headed by Emmett F. Munley, who twice failed tc
get a license from the Nevada Gaming Control Board.
2) BISHOP RANCHERIA, Inyo: Bingo is played twice a week in a 125-seat hall.
"It's just nip and tuck," a tribal official said.
3) CABAZON RESERVATION, Riverside: A poker room was managed in 1980 by
reputed organized crime figure Rocco Zangari. In May 1981, tribe vice presiden
Fred Alvarez began complaining that "money was being skimmed," according to th
state attorney general's office. Soon after, Alvarez and two friends were shot
dead — a crime never solved. Fired by the tribe that November, Zangari accuse
Cabazon's non-Indian administrator, John Nichols, of obtaining "fictitious
salaries" from gambling. In 1985, Nichols was sentenced to four years in priso
for trying to hire an undercover policeman to serve as a hit man in an unrelat
incident. Cabazon now offers card, bingo, off-track betting and "pull-tab
machines." Tribal officials insist Alvarez' murder was unrelated to gambling.
4) CHICKEN RANCH, Tuolumne: In 1984, Mi-Wok activist Karl Mathiesen
re-established a tiny rancheria so an outside firm could open a bingo hall.
While he soon had a gold-grille Cadillac, he complained that the Indians were
not given fair profits. On Nov. 15, 1987, an arson fire swept through the shac
where he lived, incinerating him. There were no arrests, or proof the crime wa
tied to gambling. But "someone wanted him very, very dead," said Deputy Atty.
Gen. Rudolf Corona Jr.
202
1991 Los Angeles Times, October 8, 1991
5) COLUSA RANCHERIA, Colusa: A 1,200-seat bingo hall has funded constructior
of four homes. The tribe runs the business itself, rather than rely on
outsiders, because "we know the way the world is," an official said.
6) FORT YUMA RESERVATION, Imperial: "Snowbird" tourists who fill area traile
parks in winter generate $500,000 in yearly bingo profits for 2,200 Quechan
Indians.
7) HOOPA VALLEY RESERVATION, Humboldt: A 600-seat bingo hall has "never
turned a profit," a tribal official said.
8) JACKSON RANCHERIA, Amador: Reputed Florida crime figure James L. Williams
managed bingo in 1985 after contracting to pay $300,000 to a local man who
financed the hall. "I was very dumb," the businessman said, complaining in
Amador Superior Court that Williams paid him nothing, skimmed profits, then
left. The hall reopened this summer.
9) LONE PINE RANCHERIA, Inyo: Elders play bingo once a month. The "crowd?"
About 25 elders.
10) MORONGO RESERVATION, Riverside: The tribe in 1984 sued an outsider for
running unauthorized bingo on one member's land. Testimony disclosed that two
reputed crime figures — Zangari and Tommy Marson — sometimes hung out at his
hall. The tribe now offers bingo, off -track betting and gambling machines. In
1989, a local grandmother won $500,000 here playing MegaBingo, a televised gamt
beamed to reservations.
11) PIT RIVER TRIBE, Shasta: Weekly bingo with $30 prizes in a 74-seat room.
"It's just for fun," a tribe member noted.
12) RESIGHINI RANCHERIA, Del Norte: A failed bingo hall is used as a
lunchroom by elders.
13) RINCON RESERVATION, San Diego: FBI wiretaps detailed the Chicago mob's
plot to take over the bingo hall, now closed.
14) ROBINSON RANCHERIA, Lake: On-and-off bingo has prompted lawsuits among
investors and the tribe. The FBI seized slot-type gambling machines in Februar>
15) RUMSEY RANCHERIA, Yolo: Bingo liberated the Indians here from grueling
farm labor. But a former tribal secretary is awaiting trial on tax charges for
allegedly fleeing to Nevada with a Rolls Royce and $400,000 in proceeds.
16) SAN MANUEL RESERVATION, San Bernardino: A 15-family tribe went to court
to oust its first management firm, then established the most profitable bingo
hall in the nation, seating 2,600 players. Tribe members have new homes and a
scholarship fund rewards children for good grades from kindergarten through
college.
17) SANTA ROSA RANCHERIA, Kings: Bingo has financed a recreation center, pa>
tribal bills and provides small "per cap" payments to 400 tribe members: adults
get $27 and kids $18 per month.
18) SANTA YNEZ RESERVATION, Santa Barbara: Even the backing of singer Wayne
Newton could not overcome a remote location. A 1,800-seat bingo hall now is
203
1991 Los Angeles Times, October 8, 1991
closed.
19) SOBOBA RESERVATION, Riverside: Bingo is closed — for the fifth time. 0
management firm was found to have embezzled $252,000. Another included a
fugitive from the French Connection heroin case. "I think a lot of the tribes
rely too much on bingo," Chairman Robert Salgado said.
20) SYCUAN RESERVATION, San Diego: "Sycuan is the model," a rival says
matter-of-factly. The showplace of Indian gambling.
21) TABLE MOUNTAIN, Fresno: A tribal chairman was recalled "because we
couldn't get (bingo) money ... to divide," the leader's brother noted. Now
adult tribe members get $200 monthly from televised MegaBingo games.
22) TRINIDAD, Humbolt: A 600-seat bingo hall financed a new roof for the
tribal building.
23) TWENTY-NINE PALMS RESERVATION, San Bernardino: Wiretaps in 1987 overhea
mobster Chris Petti discussing a possible hotel-casino here, but the deal neve
materialized. The tribe now has a request for a gambling "compact" pending
before the state.
24) VIEJAS RANCHERIA, San Diego: A casino will open soon. "They were hoping
for something better than (gambling)," a tribal adviser said, but "there were
not business opportunities other than that."
GRAPHIC: Photo, Anna Sandoval in her hillside home built from gambling profits
; Photo, Entrance of Sycuan reservation's gambling hall rivals Las Vegas. ;
Photo, Gamble Pays Off: An Indian tribe in eastern San Diego County hit the
jac)cpot with its gambling operation. Led by Anna Sandoval, above in front of h
adobe home, the Indians took back the business from outsiders and transformed
their lives. Part three of a five-part series. BARBARA MARTIN / Los Angeles
Times; Photo, Enunett Munley ; Photo, Karl Mathiesen ; Photo, James Williams ;
Photo, Wayne Newton ; Photo, Robert Salgado ; Map, California, JUAN THOMASSIE
Los Angeles Times
TYPE: Series; Infobox; List
SUBJECT: AMERICAN INDIANS — SAN DIEGO COUNTY; GAMBLING — SAN DIEGO COUNTY;
BINGO; INDIAN RESERVATIONS; GAMBLING — CALIFORNIA; AMERICAN INDIANS —
CALIFORNIA
204
PACI 23
15TE STORY df L«v«l 1 printid in FULL fonat.
copyright 1991 Tb« ?!&•• Mirror Coapany
Lo« Ang*l«a Tiaca
Ootobar 7, 1991, Monday, Bob* Mltlon
8ECTXOH1 Part A: Paga 1; Celuan li Matre Daak
LKMQTK: 4716 words
HEXOLIKZi HOW THZ MAPI A TAKGZTED TRIBS'B GANBLZKO BUSINESS;
CHIME I THE MOB DROPPED BIO TO XNFZLTRATE SANSS KSAS SAM DXEOO, BOT WIRETAPS
SUGGEST TIES TO OTHER RESERVATIONS.
SERIES: THE INDIAN'S 0AXBI2: Triisal Econoalaa Ara Banking on a Billion-Dollar
Gaabling Industry. Sacond in a flva-part sariaa. Naxtt Presparity aammm to tha
rocky wasteland ^ars tha govamaant a cantury ago dumped a handful of Indiana.
BYLINE I By PAUL LIEBERMAN, TIMES STAFF WRITER
body:
Chris Petti got the good news three days before Christmas, 1987: His aove
to taks over gaabling on the Rincon Reservation bad been approved at the very
top of the Chicago Mafia.
"They wanna go with that thing," Nike Caracci told hia. "They wanne get a
foothold down where you're at."
The call followed a faailiar pattern. Caracci rang Petti 's San Diego hoae
and gave hia a nuBber. Petti hurried across the street, to a pay phone outside
a 7 -Eleven, and dialed it.
Noaants later, Caracci was telling hia froa Chicago how the acting boas
there, Saa carllsi, had given the crucial OX. "He said, '(Expletive) it, let's
go, do it, do it.' "
Petti, the criae faaily's top contact in Southern California, had been
working toward this aoaent for a year. He bad nurtured a tribe aeaber to grease
tha wfaaela on the reservation. He had found a front man whose naae could be sent
to the Bureau of Indian Affaire. And he had endured the frustrations of dealing
with the Indians, their changing demands, faaily sguabbls* and tha sxispicious
questions of one stubborn wonan on the Rinoon Tribal Council.
But now that Chicago was on board, he figured on making a fortune with bingo,
cards and off-track betting on the remote reservation in Northern San Diego
County.
Only one thing could mess up the deal, Caracci cautioned hia.
"The O.C. label," Petti replied.
"You gotta really be careful," Caracci said.
FBI organised criae agents logged the call at 8:33 a. a. They had been
aaveadropping on Petti for six months.
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1991 Lo8 An9dl«t Tiiu, October 7, 1991
A veteran of the cops-end-robbers 9aae, h« thou9ht ha vaa ■■£• doing buainase
from 37 pay phonu around San Olago. Ha hadn't oountad on a naw federal "roving
wiretap" law that eapoverad agcnta to aonltor a aeriea of phonea used by a
auspect.
Tbouaanda of pagea of wiretap reporta would docunent tbe CHloago Bob'a< aove
to infiltrate the Rinoon-Keaervationr show oollaboration with aob faailie*
acroaa the co^ttY.^and-auggeat-organiged nrlwe t1aa_to_other reaarvationai aa
well.
To thia day, govemaent offloiala and Indian laadera generally bellttlla the
threat poaed by organised crine to the gaobling that haa become the ll-blllion
oenterpieoe of tril»«l econoaiea. They diaaiaa warnings of aob Intereat aa
paranoia or the raatlnga of people trying to infringe on Indian profita.
But thoae^offlciale probably never heard of the Rincon wiretapa — there was
no prosecution to bring tbea to light. After two yeara of plotting, the Chicago
criaa faaily lost intereat in the reeervation. The FBI, in turn, ahifted its
efforts to Petti '• involveaent in a juicy aoney-laundering case.
Lost in the shuffle were wiretape that are a primer in how tbe aob can gat a
foot In the door of gaabling halls, and how it counts on akiaaing and laa
overaight to eheatltribea out of revenue aorely needed by aoae of the poqreat
people in Aaerica.
Aa Chris Petti i put it to his aain Indian contact i "Let's grab soae money,
pal.- t i
The promise of gambling had been hard to resist for Indians throughout
California. i
They had no vast ancestral lands with natural resources euch as tiabexr or
ainerals. Displaced by Spanish missions, miners and other white settlsrs,i thsy
wound up on 96 small reservations or postage-stamp "ranoherias* in the desert or
mountains. "Pushedi into the rocka," an anthropologiet teraad it.
Rincon was one of the aore scenic, set in a valley surrounded by
brush-covered hillS. Only a third of its 3,075 acres was flat, however, and the
land could barely support light faming, grazing and orchards.
By the Bid-1980a, unemployment stood at 60% among ths 300 Luiseno Indians. To
make ends aeet, eany rented aakeahift houaing to migrant worlcera, setting down
ahac)cB, garages and camper sheila on the duaty landacape, often without
plumbing.
Tribal leadera didn't waste time when court decieiona gave then competitive
advantages first ih bingo, then other games. After inviting proposals byioutsldo
inveatore, they picked Charles Schlegel, an Orange County businessman with a
theatrical flair, i
He built a 33,000-sguare-foot, spaniah-atyle hall, diatributed buttone
promoting the plaoe and hired dozene of tribe aeabera. Then he sat in a crow's
neet watching the Ceetivities, smoking a cigar.
206
PACI 25
1991 Lot ;^«1m TiBAt, OCtob«r 7, 1991
Old-tlBsrs such •■ Max Natsattl vara thrlllad to halp tally tha handlavhan
tha gaaaa bagan in 1984. "Z raaambar ona night va vara counting, $134,000 tha
ona nightl' tba 70-yaar-old Mastatti racallad. "Zt vaa raally ■oaathlng for
Rinconl"
Thara waa ona problaB. Tha triba law no profits.
schlagal, vho ii now daad, vas cupposad to shara any profita — but aaid
thara vara nona. Though ha had takan in $10 million, it waa iapoaaibla to: finiah
in tha blaok, ha aaid, trhlla offarlng tha jackpots naadad to cospata vithi other
Indian bingo halls opaning around tha stats — ona at tha Barona Rasarvatlon,
just to tha south. '
Ha oloaad Rlnoon's ball In Juna, 198B. A sacond sanagar vaa birad, buti alao
raportad no profita. Bafora ha laft as vail, ha addad a nav attraction in lata
1906, a card rooa vith 30 polcar tables.
That Decaabar, tha rooa was raided by San Dlago County sheriff's deputies,
who said it was offarlng illegal Chinese variations of polcar. To triba Baobars,
it asaoad lilca another exaapla of prejudice againat than. "They're tryingi to
give tha Indiana a hard tlsa," the poker aanagar declared.
Cbrla Petti waa a frsguant viaitor to the poker parlor. In fact, a friend
who want with hia aaid ha "actad lUca ha waa in charge," according an affidavit
filed in federal court in San Diego by FBI agents aeelcing a wiretap.
The FBI had baea intsreatad in Vetti, new €4, for yeara. Originally fros
Illinois, be had surfaced in San Diego as bodyguard and chauffeur for thai
amiable alder statasaan of California aobatars, Frank Boapensiero.
When "The Boap" was gunned down in 1977, Petti stepped in to fill his
shoes. Ha toon had his own live-in chauffeur.
A tria Ban with blow-dried gray hair, ha was a neat dreaaer — Batching hia
tie and breast hanAkerchief — and a follower of routinaa. He would have lunch
on Hotel Circle north of downtown, than apand the afternoon at the Stardust
Hotel i Country Cltib, whoso staaa rooa sarved aa hia unofficial offies.
Xvaluations of Petti'a stature in the Mafia are a raaindar that such
Intelligence la am iaprecise art. One survey listed hia the 4Bth aost affluent
BObtter in the co«uitry, but Petti laaanted in wiretapa, "I 'a in bad shape,*
and soae downplayed hia as a "hangar-on," a aan of Greek extraction (given name
Chris Poulos) trying to iapress the traditionally Italian eriae faailies.
He had convictions in San oiego for bookmaking and for using a baaeball bat
in 1979 to aasault a aan who coaplained about a noiay party. Quoted ae saying he
wanted to help the aan "get soae sleep," Petti waa fined $1,000.
The chance to get a handle on Pettl's activities fell into the FBI'S lap in
Auqust, 1986, when a friend naaed Robert Banjaain, a career criainal feeing a
bank fraud charge, agreed to work under cover for agents.
Petti was dealing directly with the boys in Chicago, Bcnjaain reported.
Thair inaediate chare wae taking over accounts of recently aurderad Tony (The
Ant) Spilotro, vhO! collected a "street tax" froa bookaakars throughout Nevada
207
I PACK 26
! 1991 Loc AngalM TIbm, October 7, 1991
I
uid Southam California. But Patti's raal paaaien was "tba Rineon Indian
Raaaxvatien," accoi^din? to tba affidavit.
I
Tba kay to it, ]|anjaain said, vat Pattl'a eleaa ralationahip vith triba
B«Bbar Qlann Calae,| vhoaa fatbar vaa on tlta Rinoon oouneil.
I
Tha aaeurlty chlaf at tha oazd room, Calao was hard to Bias. A shada ovar aix
faat tall, ha vaighad oloaa to 300 pounda and drova-a naw whita Cadillac. Calac,
who had what fadacAl proaacutora oallad an "axtanaiva oriainal racerd,"
including a falony {burglary conviction, axartad influanca through "Buaola" and
payoff I, Banjaaln aaid.
Nhan ha quaationad Patti'a Intaraat in a vantura that aaaaingly loat aonoy,
Banjaaln aaid, ha waa told that, in gaabling, all ia not what it aaaaa. Ba aaid
ha evarhaard Patti aay that in tha card rooM, for inatanea, Calao alraady vaa
"awallowing" proflta, not raporting ravanuaa to tha tribal cotincil.
^^.Ihifwaan't lllca Navada, whara tha casing Control Board auditad your booka
4Lnd paid surpriaa viaita to your counting rooa. You only had to ahow tha Indiana
'% profit-and-loaa column at tha and of tha nonth, Patti said. \
A lot of monay liatad aa a loaa raally vaan't. Xt "atieka to your fingara,"
ha aaid. ' I
Thara ia long praoadant for danial whan it ooaaa to organiiad eriaa in
Aaariea. i
No laaa than J. I Edgar Hoovar rafuaad to baliava thara waa a Mafia until 1957,
whan Ita laadara vara caught aaating in Opatata Kaw Vork. Zn Laa Vagaa, navar
Bind that Bugay Siagal opanad ono of tha first caalnoa and invaatigations found
aob linka to 10 othara. "Many Navadans," raoallad forsar fadaral proaacutor C.
Stanlay Buntarton, |kiaaad it off aa "a fadaral vandatta againat tbair atata."
Haminga of "O.C." intaraat in Indian ganaa aiailarly hava baan nat by
akapticiaa.
**In 15 yaara of {gaaing activity on Indian raaarvatiena thara haa navar baan
ona claarly provanicaaa of organiiad criainal activity," Ban. John McCain
(R-Arizona) aaid upon tha 1988 introduction of lagialation to craata a National
Indian caaing Coaaiaaion.
Tha thraat vaa diaaiaaad with cbaie flair laat yaar at a Laa Vagaa aaating of
tribal laadara and I Tony Hopa ~ a lawyar and tha aon of antartainar Bob aopa —
who vaa naaad by Praaidant Buah to haad tha coaaiaaion.
Whan an Apacha official coivlainad that Arizona 'a attomay ganaral aav tha
Mafia bahind avary i cactua , Hopa of farad a atory to raaaaura tha Indiana that ha
undaratood tha ludicreusnaaa of auch a notion:
I
"Z hava thia iaaga in ay own Bind whan thay talk about Mafia infiltration. On
tha outikirta of Laa Vagaa, at aix in tha aoming. A black Lincoln, six paopla
eoaa out of a houaa in black auita, black bata with a bunch of guna, opan tha
trunk of tha Linoeln and apaad out aeroaa tha daaart 300 allaa to put tha auacla
on" — nov tha punch lina — "30,000 haavily araad Indiana."
208
PAS! 27
I 1991 Los An9tl«l TlBM, OCtobir 7, 1991
Th* erovd burst 'into laugbtsr.
Chris Pstti'a car was a Lincoln. On March 31, 1987, his drivar sssmI it up
to tbs aast tarainal at San Diago'a Lindbargh riald to aaat two aan from
Cbioaao: Nicbaal C^ Caraeci, 93, and Donald (Tba Nisard eC Odda) Angellni, 65,
dascribad by tha ni as ovarsaar of tho Chicago sob's gaabling intarasts.
On tha vay to Rinoon, thay sat Calae at a bakary in Bsoondido. An aqant
ovarhaard anippata io« talki "Chips, avarything all raady." "Mot an unraasonatola
contract." {
Tha Ban rattimad tha naxt Bonth. Ovar dinnar, Banjamin raportad, tha
vhlta-halrad Angalini announoad that tha eparation was going to ba run "our
way."
Travallna undarltha nana "Brooks." Angalini was a datail Ban. Ha notsd that
tha bingo hall wa8i41 ailaa froB Hotal Cirela, that it naadad stucco and hid
cracks in tha parking lot. Ha waighad tha pros and cons Ilka a classic aiddla
nanagar, which ha w««, »• • "ob "capo," just balow tha vary top laadarship.
Caraooi, Angaliai's brethar-in-law, was a stap lovar on tha totaa pola,
assignad to "raaasart tha influanca of tha Chicago syndicata on tha Wast Coast,"
fadaral authoritias said.
Thraa Bonths laiar, Angalini flaw back to California. Aganta raportad a
aaating in Los Angelas with tha businassBan Patti proposed aa a "front," Saa
Kaplan, a faatbar suppliar who sinoa haa diad.
Kaplan has baam around "paopia," Patti aaid, but had a clean record, having
even passed screening by the state attorney general 'a office when his naaa was
subaitted with a card rooB proposal for laparial Beaeh.
Mow his naaa woald go atop tha prospectus aubaitted to Rinoon.
Ten other group* wanted to run the gaabling there after departure of the last
aanagar, Includingia pair of foraar police officers. But whan Petti returned
frea the Los Angeles aeeting July 13. his phons rang with an optimistic aessaga.
"Everything is going forward," Calae told his.
U.S. Dietrict Judge Gordon Thoiqpsen Jr. had approved the "roving" wiretap
three days sarlieri All told, agents would intercept 6,033 ealla.
They recordad Petti and Calae diacueaing several reservation deals around
California. Ona gambling promoter waa inprassed with Petti, Calae said, and
"won't Bake a aovei without first going through you." Another tiae, Calae
laaanted that a veteran bingo nanager — who hae worked throughout the state —
preferred "to go through" two reputed Pala Springa-area organixed criae figures.
The Rincon ploti eolidified in the fall of 1987, when California approved
off-track wagering] on horee racea. Undar court rulings, reservations could offsr
it too. By Nov. Ill, in a call to Chicago, Petti envisioned alaoet a full
oasino, with horsei betting added to tha carda and binge.
209
pa4i
1991 Lea Angtlu TlMi, Oototer 7, 1991
CarBooli "Omm, that's m big vlnnar, don't yeu thiztk?"
Pattl: "You'll handla tvo or thr«* hundred thousand a (axplstlva) dajj
Caraoelt "I just want to aaka aura va gat It, if anybody 'a gonna gat it."
.i..
Thair propoaal gtiarantaad tha Tw<<i»«f $30,000 par month, plua 91% of any
irofita — although^ "thay'll navar aaa" that part, calae notad in ■ oall to
Patti. Tha trlba would hava to agraa, ha aald, baoauaa "aenay talka."
But Patti and Calac undarastlaatad tha difficulty of gatting anything
through Rinoon'a fiproa elan politioa. Chicago aoon vaa aaklngi Why ara thoaa
"(axplatlva) aorona** talcing so long? i
Aa Calao oxplainlad It, bia fallow Indiana alwaya argua. "go around in :
oirelaa." Ha aald hk finally told thaat "Wa'ra going to ait down and you'ra
aithar gonna (axplalblva) do it, or I'm walking away. You guys aran't gonna have
(axplatlva) and wa'ra gonna go to tha Palm Springs Indians."
Ha waa partioulalrly fruatratad Dao. 9, whan tha Tribal Council bald a aaaring
on gaobling propoaajls. K San Diago attorney dalivorad a (1,000 faa to aoo^npany
tha application baa^ing Kaplan'-a naaa.
That night, Calaio phonad Patti to raport thay "alaoat had It." But alwoaan
on tha council kapti aaklng aJMUt Glann Calao 'a tia to tha pro j act. Sha alio
rantod on about Kapjlan not baing tharo in paraon. I
"How do wa know |thia man raally axiata?" aha aakad. "Ha could ba aoaa nama
you took off a toati|atona . " I
Patti wanta tei knowi Nho'a aaking all tha troubla?
It was Glann's cousin, Ituth Calae. Sha waa vary auapieioua. |
Ruth vaa not aoaally opposad to gambling, but waa appallad by tha proaotars
who approaohad tha jtriba. On* of farad a starao aystam aa a "gratuity." Anathar
proBisad "undar th^ tabla" payaanta. A third aakad if ha could aat up priWata
rooms for "hoataaa«|a . "
Sha haard atoriaa from othar California raaarvationa aa vail, including how
tribal laadars at two of tham had baan murdarad aftar complaining that Indiana
waran't gatting a ^air ahara of gambling profits. And down at Barona, a binge
aanagar nanad Stavart Siagal had juat baan caught rigging gaaaa, planting!
"shilla" in tha audianoa to play praarrangad winning nuabara. j
So whan Clann aurfaoad in Rinoon'a oard room — aha'd known him for yaara —
Ruth bagan "raiaing hallelujah." I
But ha had folldwara, particularly among three clana of Calaoa. {
"He'a juat Glarai ... he wheela and daala," shrugged another cousin, Doug
Calao. "Ha talka smart. . . . He'a collected from insurance coaqpanlaa fen people
who have got hurt in auto aooidanta."
210
PAGE 29
1991 Loi Angtlei TIms, OctobM: 7, 1991
Dou9 and othars llatmcd vhwi Glenn told Uira "I )uv« p«opla" vlth rtlOUrces
to Baka tba gaablin« vork. With Rutb sohadulad to com up tor raalaetlen, aany
Calaoa jolnad tha oaaipaign to dafaat har.
Mtti conlaaratad witb Glann. othar Indiana ahould appraolata bia, Pattl
aaid. Wasn't ba bringing tba baat bid? And ba navar took aonay froa tb« triba —
ba only took trom tba "otbar aida."
* Dae. 17 1 In Cbioago, Caracal la naxvoua. Ba and Angallnl ara going to aaa
•Nlnga' carllal, tba acting criaa boaa tbara, for tba "final aay."
Ha 'a not aura bev to advlaa Carllal on off -track batting. Mbat if tbay'ra
raldad?
Pattl I "If thay plnob you, you put a raatrainlng ordar agalnat 'aa."
Caracal agraas. Tbay could hlra aoaa hotahot lavyor to ralaa civil
rlghta clalsa on babalf of tha Indiana. Soaaono lika Alan OarshowitB frea
Harvard. Of couraa, "tbaaa lawyara faas, tbay kill you."
* Dae. 20 1 In tba aoviaa, aucb aaatlngs taka placa at rotuid tablaa ovar bovla
of paata. In raal Ufa, It vaa braakfaat at NoOonald'a.
At 9130 a. a., aganta froa tba cbioago offica of tba TBX vatcbad Angallnl and
Caracel arrlvo at tba fast food raataurant on Zdka Straat in Addison, 111.
aeon after oaaa tba chauffaurad car of 8«b Carllal.
Tbay aat for an bour, tban left.
* Dao. 221 8132 a.B. Caracci oalla Patti and aaka if ba naada to talk. Xt'a
tbalr signal. Pattl aakaa bis way to tba 7-Blavan and calls a Cbioago pay
pbona, at a oar auotlen businass. Caracci fills bia Ini
Tba boaa hadn't avan looked at the contract. "Do it," ha aaid. Just lika
that, approved a 9500,000 invaataent. Nov thay have to find ways to get the ekla
back to Chicago, "filter the aeney." caracci can't aapbaalte enough the need for
prasaution.
"You gotta be in the background, oauae you know they're gonna hook you right
up baok through here. . . . Tben that 'a gonna be the (expletive) end of it."
pettii "Z don't dlsouaa nothing with nobody."
* Jan. 16, I9«ti Caraocl aaya Angelini baa selected a 71orlda aan to run tha
ball.
"This guy is supi>osed to be a helluva (expletive) promoter . . . and he's
with the (bleeplna) Indians already, he's got bis naae down there ah, the Bureau
(BIA), in Hlaconaln, he'a got one of these joints."
They'll have to conault the New York aeb, however, beeause the guy la "with
New York."
211
PACI 30
1991 Lm An9ele8 Tiies, October 7, 1991
• Jw». X9: P«ttl not«« that any oontraet with tha trlba will hava to go
throu9b tha BZA.
Caraccl: "That's just a atamp, ian't it?"
Savaral yaara age, aaid tba rapid growth in Indian gaabling, BZA officials
aakad tha fBI to oonduet baoJcground ohaoka on propoaad finaneiara and Managara.
"Ttiaia aaaaa ♦;» lia ■naa— nrTilarirT^onfrnnra) don't naaa tha raal lovaatora."^
aald Tea oowall, rorsor auparintandant o£ tha BZA' a Soutbom California office.
Although tha chaoka occasionally found a falony oonvlotlon — tha on* ground
to disqualify an Invaator — th«y did not leava Devall with meh eonfidanca.
■You'd hava to hava a hall of a baolcground tc gat notiead," ha aaid. "Tha guy
who atopa you on tha highway dooa a battar chacic. "
"Thay caaa cloaa," tribal eldar Masaatti said latar of Pattl
friands. "Wa wara lucJcy."
Xndaad, nawa froa tha "raa" aaaaad upbaat for tha Chicago crowd. 'Tha
alactiona eaaa out pratty good," Calao glaafully told Patti ona night.
Pattit "Tha alactiona?"
Calaoi "Ruth lost, bar big fat ass is out. Bo you guys ara gonna gat it."
Utar, ha confiraad it: "Svarything'a a go," tha tribe had votad.
Than tha folks at Rincen started aquabbling again. Bonaone wondered if they
could get a better deal by splitting the gaabllng in two. Keybe get $35,000 a
■enth for the cards alone, extre for binge.
Petti blew up when Calao told his. He waan't going baok to Chicago and make
a fool of hiasalf.
• March St AngeLini la having aeoond thoughts. "Re's heaming and hawing,"
Caracci tells Pstti.
It' a not Barely the unpredictable Indians. He's wary of the Florida bingo
manager, who's an agoaaniac and spread thin alrsady. And he doesn't like the
perfonanoe of another "joint" they hava, a non-Indian bingo hall outside
Baltiaora.
With Rlncon, he has the middle manager's worry — that he'll look bad to hia
bosses. "He don't went to go to these people and get that kind of eoney,"
caracci explains, "end then come up abort."
• March 17: The Chicago boya are backing out. Angelini simply isn't
comfortable investing the orgenitation's cash at Klncon.
"It'a a shame," Caracci conaoles Petti. "... You got the <expletive) door
open."
212
PAGX 31
1991 Los Ang«les Times, October 7, 1991
Of coursa, ir Pstti can put to9«th«r a deal with othar inveatora, Chloago
will taka a placa of tha profits.
Pattl isn't fasad. It ao bappana, ha ]cnotra a guy who alght ba intaraatad.
Banjaaln had baan telling bia about a Naw Jarsey nan who laundarad fundi for
Coloablan drug lord*.
It WBB a covar ^tory to Introduca an undarcover FBI agant. Pattl had nevar
takan tha bait bafqra. Nov ba did.
on April S, ha aat "Pata Canuaal" — actually Aaant Patar Ahaam — and they
drove to Rincon for a tour. Glenn Calao said ha vould need 913,000 to "loeX in"
the council, the agent reported later.
This time, thay would put Calao 'a na»a atop the proapectua. If anyone
wondered how ha got money to open a gambling hall, he could aay It traa
inherltanoe from a "Couain Red Cloud."
But it waa a doomad plan. Tha tribe's attorney reminded Calao hia name
couldn't be usad because of his criminal record. The FBI's interest was soon
detoured.
I
The foous shifted the moment Petti told "Pete," the undercover agent, that
he ]cnew a prominant San Diego buainasssan who could help get money out of the
country. It was no iless than Richard T. Silberman, onetime chief of staff to
Sev . Edmund S. Brown Jr.
' In February, 1989, the Senate Select Committee on Indian Affairs held
'hearings on tha "Federal Government 'a Relationship Kith American Indians." /
During a brief portion on gambling, three witnaases gave varying appraiaala of /
tha threat of organized crime. /
FBI Deputy Assistant Director Anthony E. Daniels said there waa mob !
involvement at the etart of Indian bingo In Florida, but didn't see it as a
"major problem" at the moment. Of courae, penetrating "fronted businesses" was
difficult, and "greater infiltration" was likely If tribes opened full oaalnoa.
Callfcmia Deputy Atty. Gen. Robert Morehouse said mob figures had been
spotted on at least two reservations in hie state i In 1980, Palm Springs-based I
Rocco Zangarl opened ■ card room at tha Cabazon Rassrvatlon. In 1985, Jamee L. !
Williams of Florida took over bingo on the remote Jackson Rancherla in Amador I
County.
Then came a third, mystery witness. He said the officials underestimsted
organised crime.
Identified only as "Harty," he testified behind a screen, his voice n
V y^llstorted . v\
"Marty" said be ihad run an Indian bingo hall as a mob front. Hs had cheated >
tribe out of $eoo,000 a year, he eaid, but kept peace by paying the chief $1,000
a week as a "consultant."
213
ig»l Let Xnqtlu TIms, Octobur 7, 1991
PAOS 32
Km Claimed knowXAdgs of 13 Indian halls arotind tha country Inflltratadl by aob
faalliaa. Tbay alclaatd aonay "through tha purchaaa of auppllas, which trara
nonaxiatant and ov^rpriead," by padding payrolls and through fixad gaaaa K-
vaighting aoas balls In tha bingo mixar, for instanoa, vhila llghtaning othars
with baliuB. I ^_^^ I
But-his^laias wars brusbad off by Indian laadars. R«~w»«~AnanonyBous|
lou^buth, a guy with a bag ovar his haad tarnishing thaa all wl%lr-tt~te»«d
^rush. I
indaad, thara wis oaraly bis word for all this at tha tiaa. Only auoh iater
would an Bssooiata of Naw YorX aob ohiaf John cotti ba arrastad for shippflng
alet aaohinas to tha fit. Ragis Kobawx Raaarvatien. only latar would tha slneon
~ wirataps ba filad sway in a San Oiago oourtuous*.
So fsv baIiavad-f"Marty«-orJiis axplanatlon of why ha was talkingi "I gjot
raligion."
But that wasn't
tha whola story. After ha'd basn caught stealing, ha eaae
down with cancsr. $oan aftar his tastiaony, ha diad.
^ "Karty" was Stayart Siagal, foraar aanagar of Barona Indian Bingo, 45 tainutas
south of Rineen.
TWO Bonths aftar tha Sanata haaring, Chris Patti ws under arrest. So was
Riehard silbaraan. ] It was a splashy aoney-laundaring ease, with Petti
eventually santanoed to 30 aenths in prison, the foraer politician to 46 laonths.
The indictaant iade no aantion of Rinoon. That plot bad never been easriad to
conclusion, after all. I
A aonth aftar their arrests, the bingo hall reopened. I
The Rineen council finally awarded the contract to a group of buainaaaaan
froa Los Angelas ahd Phoenix. Taking no chances this tiae, the tribe's ehairaan
insisted on a seoujrity deposit of sorts: "9130,000 up front, held by ue.^
aove.
It was a good
The new aanagers quiclely began fighting aaeng thaaselvea
Whan they couldn't! open tha hall the fourth day, the tribe padloelced the doors
— and kept tha $180,000. Six years after the bingo began, it's the only aenay
Rineon has gottsn froa gaobling.
The red, whits ind blue Rlncon Indian Bingo sign still stands along county
Route «, the space! to list ths daily jackpot vacant. Orass grows through !the
parking lot. Cows occaaionally wander onto the road.
For the Indians^ it's little consolation that gaabling halla sit vaeaht on
other California reservatiena. They are aware, aa well, of how a few hav4
flourished. Not fab away, Sycuan has new housing, an aabulanoe eervice aiid acre.
Alternative devllopaent proposals are not attractive. Three San Diego {area
tribes have weighed offers to put duaps on their land.
So Rineon is considering new gaabling proposala. "Can you believe it?4 asked
Ruth Calao.
214
PACl 33
j 1991 LOI AngolM TlBM, octobtr 7, 1991 I
But you can. On la qulat aftamoon, waiting for a rain oloud to roll ev«r Mt.
Paloaar, it'a hard ito iaagina that a Mafia family 2,000 ailaa away cvor vaa
intaraatad in this maglaotad turf. Many on tha "raa" atill don't think iti
happanad, including Ruth'a own aotbar. I
■That'a juat a lot of ruaora and balonay,* aha said. I
"I hava a friand who'a organiaad oris*, aura," Glann Calae aaid during! a
briaf anoountar witfti a raportar, bruahing aaida all quoationa. "Chria Patti.
Ha'a a good friand. I Ba'a alao vary poor. I'a peer. Tha band's poor." j
Calao haa not baian aaan around Rincon such lataly, triba officials aayi
Ha'a up at tha tiny Twantynina Palas Rasarvation in San Bamardino County.
Serving aa ita buainaaa aanagar. in fact.
Currantly pending before California offleiala is a request froB Tventynine
Palas for a tribal-state "compact" under terms of the new Indian Gaming
Regulatory Act. It would allow off -track batting on tha reservation in the
dasart vast of Palai Springe. I
Chicago Hob's Role: I The Key Players I
The Chicago organized crime family acted much like any large business I
organliation aa it moved to infiltrate gambling on the Rincon Raaervationd A
proposal waa packagiad for a decision by tha top boss, then carried out by middle
nanagera. Bare warai tha four key players, aooording to rsX wiratapai
* CHRIS PSnii Bel waa the crime family'a contaet in Southern California.
Looking to "grab aova money," he proposed taking over the Indian gambling
operation north of $an Diego uaing a "front man."
I J
"I guarantee you^ you'll handle two or three hundred thousand a (expletive)
day," ha told Chicago higher-ups. It would be easy to skim profits, ha aaid,
beoauae the Indians i would have a minimal role: "No counting of tha money, |no
nothing." I
• MICHAEL C. CARXccI: He was Petti' s contact in Chicago, and was assijgnad
by the family'a boasas to raaaaert their influence on tha West Coaat. ,
Enthuaiaatio about the Rinoon venture, he told Petti, "I juat want to make
aura wa gat it, if anybody's gonna get it. I wanna get it firat." I
Later, fruatratad by tha Indians' squabbling and changing demands, he amid,
"It'a a ahame . . .JThey got an opportunity bare to finally get aome aoney| out
of the (bingo hall) i . . . and t^.ay end up (expletive) around." Patti'a
raaponsa: "You need I to stay on these (expletive) Indiana a little more." I
I 1
* SAM CARLISI: He waa acting mob boaa in Chicago, and ha endorsed thai
Rincon project. A burly, docislve man, he approved a $500,000 investment without
even reviewing the aambling contract aubmittad to the Indians. '■
"Ha didn't even )^t an aye that guy, you know," Caracoi later told Petti.
■Ha aaid ' (expletive) it let's go, do it, do it. . . . Don't even tell me about
it. . . . What tha (expletive) do I know about a contract?' ■ i
215
I PACK 34
I 1991 Los An««lM TImb, October 7, 1991
Th« $500,000 l«|"llk« piddling cant* to thM* 9uy«« you know," Caraooi notad.
I
* DONALD AN6ELZSX: A mob li*ut*nant and tho cria* family' ■ gaoblinf axpart —
and also Caraooi' • I brothar-in-lav ~ ho vas •mmigttad to ovaraoa tho vantttra. Ha
vowad to Pattii Tha operation ia going to ba run "our way."
La tar, howavar, |ha had sacond thouohts about risking tha top boaaaa' nonay
and pullad out. AaiCaracei axplainad it: 'All thaa* (axplotivo) yaars ha haa
always usad hia owtt BR (bankroll) and whan you usa your own BR, if you blow it,
(it) doaan't aaan Anything, you undaratand? You taka tha leaa. But ha don't want
to go into thaaa guys and . . . blow (thair nonay) .... Ha' s afraid, ha
doasn't know what tha (axplativa) thay'ra gonna do."
ORAPHZC: Photo, Sidin advartisss gambling at Rinoon Rasarvation, but oparatien
has long baan out of businasa. ; I>heto, Ruth Calse, laft, rasistad sob takaover
at Rincon. DON BOOKER / Los Angalas Tinas Assooistad Prassr Photo, Tha lata
Stawart Slagal admitting staaling as bingo managar for Barona Raaatvation.
Aaaociatad Prasar fhoco. Chairs on tablaa of closad Rincon bingo hall in 1986
photo. DON BXRTLBTTZ / Los Angelas Timas; Photo, CSRZB tettz ; Photo, mzchaxl
c. CARACCZ : Photo J SAN CARLZSZ ; Photo, OOKALD AM6ZLZNZ I Nap, Rincon
Rasarvation, Los Attgslas Timsa
TYPEi sariasr infobox
I
SUBJECT: PETTI, $KRZ8; CARACCZ, MICHAEL C; CARLISI, SAM; AN6ELINI, DONALD
(THE WIZARD OP ODDS) ; RINCON INDIAN RESERVATION; KAFIA; AMERICAN INDIANS — SAM
DIEGO CODNTY; GAMBtlNC — SAM DZEOO COSNTY; ORCAMIZEO CRIXB — SAM DIS60 COaMTY
216
217
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219
NFW JEBSCY LAW JOUKHAL SEFTEMBE» 13. 1993
Was Mob Behind Tribe's Casino?
FHMd flf te Tribe
S«yi Vm tPomt: •'We k« aU at
w«b Bob Pnnk bwwne be )W n
on ol anKy. He left on sood Km
aad be ■ > food fneod. We cipna i
Win kU of Bfit> Pruk s Omiaft
w«h wUtsKB. Acd ttsi Wiliiua a
cuMidciwt by takni jieeMBoaofi id
Vas D<nk tatd. "I'm gtad we hwad
ttM fltt. Tftkc my wwti for n. He tau
ao MwityuMtJB at aU Nooe Nothaos
■1 all. The BlA fBomu of tDdaao
58.
nsidai aad twt-*UDt uoomI atf-
veniM« ^na^cr for Tht Dath
rtrftan uuofcnai ttai hu offiaal rote
wtfi me mbc coded m 1991. Bia toe
Fnak. addmg.
c 10 die nbc. lays
"If tt»cy were fong lo
1 New ieney. Id bk£
dttcf Van Dunk and the tnbe's
DC. lotobyM. Albcn
o. ali deacnbe Fra
satuf ai totncww wamig in Uie
waft iboald dK cian receive mbal
A 1979 Nortel iwganar anicte
WO-
Wil-
Insa wed Forhea b« wididii* bs
Bin vohoBVity after be '
duod bofo tiipT**" *^ WillttBa
hetpnt Accanno «mh die purdaae
wont) wu pc0cd by dv FBI u mrk
S3S miUioa dunsf die cmilv i980i
Accordiag lo Uw-«siiuiicjneoi of-
fiaab m dK cax evasion case tod
eiiewtaere. Wtlhaira bas a bunw of
owaoit and nioBinf busmesacs. hovn
bago pahon to «np chtba. wiUi
adKfi fraDOBf for bnn. Aad in •(
kan dne caxs. Fraak appewi lo be
fmn^ for WiUiaim
Id die fini cue. Fraak. aocordai
u New Mcuco i
■ 1981 B «i I
pro>ecuior\
Savi Frank aooui HuleaA
"Jtiiwnv Williams buili n and 1 o-
II The buikliDf wai tcaicd
charwy w 1 was msi uk tandWrd
The New Mcaico repon sau
the Hialeah business wu cuec
vtotMioRS of Fkmda s ^aimnf
IOCS. Fnak wys. 'That i mtc.
jua owned dK buUdm;
/Utqied Skinny of fii^io Pr
In die durd eumptc cned b<
thor««s. Frank., a 1937 fradua
ScMsi Kail Un'vcrsny. wu bi
atcng with Williana
Wiltanas. Accordmg to a 1912 repon
issued by The Governor a Orfmad
Crime PieveiEMii Comrmsmi laled.
"InAtoKBoa of Orfanoed Cnms bao
Bago n New Mctko. Frank tailed
to dadoae both hu and wmams
hall
Ffank. wAJUfOmg aj u»e rcpon. uaed
iiw nne ol en auptoyee of tes trom
Hok^ Hsil. a biago putor a Flor-
n reilirv
I WUlMarv Mu «:> baakroU ds pctemal
I Weill
, JackMO. Ca
The accusation was bnaft ■»
earty 1986. a lew momhs ahc
Rampoufhs chief. Van Omk
latraducBf Frank lo the New t
pteas at die mbe > new msiiaft
coonlaat- Frank's New Jcrsrv
paay. Rory Manayemem Corp
upMd a coairact with die cl
I9S5 (o betp m the eflon to t
Odioi. paracttlarly law enfone-
mem oAienb. charaocnze Fnak as •
fnn for Williams and WUlwm'
Idafia iiiiiiiiaiii And Wilbams. uy
federal proaeaaors. has been mvotved
in bngv VBot he ran an AlcroQ bago
hall B 1973 for Joacpb Merto. de-
icrdied by audionaea as an Ohio
btmo kmi coDVKUd m 1979 of
ducoBg an tUefai brago
grand dieft and garablBg.
Frank s mvotvcmem with Wiltiaras
goes back to 1978 when, accotdrng to
coun papers Filed by the federal
Mami Smkc Force tn I9S7. Frank
Wiiltams and others lo bribe a Flondi
tegMlaooB favorable lo diem.
hjfh-satas bmgo hall (or 49 p
the fUmap
■9 get SI perccn. The co
the mbe S29 millior
15 yean, accovdag w Fraak aik
Dunk.
Abom anrcn momhs after du
by Frank. William^
acomdag lo lederal prpaecmort.
Jackson -
SO mki Borthcas of Sacrainer
as chxf financial backc
SI5.000 a Bighi. After ye
of &SM.O0(
and anoraeys' fees to
1991 Though about ha
of action included
n die I9T0I lo »vo«l
; die New ieney Sale
I LovcMigaiiaa. Fraak
' AMtaoay. Yean ago 1
am fvlilad for
concocted, wnh man of dK profn
goi^. lUegally. to Willwns cora-
pattBS rather than the charmcs
WUlMBS. for
Nathvdie
Frank acknowledges pUnag t rote
m tryag lo set up the bmgo operation
for Williams m Albuquerque b 1981-
S2. aad fur
oamad prmc^als m the propoaed
venaae worked ai Hialeah Hali.
After bca« i which he ownsd. But he wys. "1 was
of . on my way lo California and Janmy
Hp by WUUmbs. dK . askad me so nop by and check a out
He vataMd by opouon. and tor paid
ciiBrsabte sobc- i Hale^ Hall
a 1 i ■ The I eunpte of FraiA allegedly frommg
I Fnak Qefillo. | for Williaim. While Frank admas he
. and while Flonda
wah tte mob bom m 190 for fisaig i
B Fteida. GehUo was coa- I
m I9tl.
I oAioer of the buu
dK WBlMrni
1997 dM "dttfe I
dw rWillBna) \
iHaU.'
•ay. though, that the Wtlliams/
gnNp. after securing an empio
h the Mi-Wuk Ir
told 90 perccm of the comr
group tor S7SO.O0O
of the New
corporation. Rory Manage
Fraak was die prcudOM of
Services. Inc..
nself as a business cipert m n
bingo halls on reservatioas-
Fraak. however, says he le
Nov 29. 1985. "before die «
lions suned" He says he w
comftmable with die team b
in by Willinms. ipeciricallv
direc peoptc he says be laser l
end were convgBd fdcas Iran
England
He produced a lener fro-
Flonda aoomey represemmg W
wlucit ackiKVwledgcs that Frai
ugMd on Nov 29. I9K5. ana
fore tfuukl not have been mdu
an laaial plauaiff or a subs
cross-dcfcadaai . Inuially .
WUlBms and Arraw Maau
sued Awbry for uaerfcnag wa.
coaoaa. aad Awbry camei
The lawyer. Brace RaadaU o
220
IMS kno. "Wc m uplom* *«
pouMnes « eanan«l y" t™"
OiulmBii"
<p9«RS>r BO iudi ■eooo "» <*■
nimd. u Fmk renaMOl • ™*-
dcf^Aul od ts oaaul on OK ^lot-
mK. Frank uliiuo » «" «^^T,
,9r7. BrX Oc re^ <*• "^
CO, it>ou(B RudiU ra on BO
1„^. RioMI Imi HOC ami. "U^
nl you ]UB Did me. 1 """"SV 3id
extncBol trom 0>" """^ ""ILZT '
. Law laumai reponn i« •'*"
l|0.
Fraok pioduod • "'"'■"• Sf"^
.«,h.tooo^t'».fr^y-,J
lua BtiMfii out becme l oMia i »■*
the bKkfrcKHih of thoM pn^ ^U-
luiM tPTOUfW B. ud I ne«r e*« |«
Eifhiaai diyi after
nanon ' from Aiiu"*
C^Uforma. Fnak
SSw « p™— ot R«r M-
•n« fcdcnl proKaon m Ftondi
uier cooclodo) Ou. Ok mo of New
EoitlMd felooj •cmiUy broupB Pra«« !
^J^lunu iou> 0. M>-WBk ladao i
TVpraMcnon mOwrlWTpre-
,cmmi mion. lo>k Frank » w,^
Frank puvo) • omU roie m •» u-
K„^ 9, WUluUM "mJ ha imoquo
lo bnfce m unaainK) ^^**"^V^***
jouujr 10 imi lejalKW favorable lo
Willmns ind hi» ummin-
xca>nlm( lo OK mtrntnirtmi.
Frank pickoO w ""^ *'"°„^2'
meal from • lo«7r>» '»' WiUBini
^g>»
i,,l de»eio(>ci AwBiy loai».
•Frank wu mere m OK "kP"^;
ukj he «mi OK pranoea. bu •Ml
ever aw wis WUlaim. who ran ok
place. 1 oe«f aw Fra»k bui OKe ot
In |9»5 Fraak lold lepooen n
, leney Oai ba boeter wa prt-
punj lo o.« .p lo $4 rmUKD ^
htjaK of OK »nmprait» enon. fct
he itfueol «> «»«rfy "^ t"*"
19S5, be OeKnbol
New Jeney ««». •» niinnrtmi i
,a> of die LUinmiiO)'." eceoedat
TV A*rw rort 7i«ei. On Se»». 3. >k
Fr»Bk Rimtpough iiioree^
Sdaeaei. lod Cluef Vm Dunk «l
uv Frank's fineJ cobobh eipuH
ihoa iwo yon efo Howe»a. ex
,.«nui> fonsed ui I9»5. Ror
> recorts w«r
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McdiKbeoo. "n of Rofy »
Frank ■ effaro on bdmlf of Ok li*t
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u far u 1 know
Meyo am Roey i
TlBodOfe Cobn of Livinfaoo-
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_ Joel Milto. will MX <
She lefemd ill il«no "> *;,?*' '
lo *i lawya. Sdonder MuKi o
dmed a lamn averal pboee enU».
Ai foe Fraok adiy. he By».
wa wortat for > molical lib fan
didnl wort OB md now Im r
but I'll
i| (el Ok tetcni
(far wmana
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bea«e OK propoeed kfnfaooB
I I OK oae Senae. While Ok
poravyed Ok iiiBaiiird
I pnnia^ajx B da bribe
Frenk " '"^
oely a Oai of
labbyn end i waimii
umed ChkrteJ Bofus. wtio h«l
owned Ok SouBi Ftondi bmto
Om were l»er nken o«et by WiUami
,al ikmaKd by Aciemiro a ">
lUejed acrapamer of Boi».
ICO aioanues. h«> pleaded gmlly a >
biato relaed bnbery chirje o «K
19701
Learntheanswerim
— ' ! youenterthecouktroom,
Limits of Speech
In Sale v iimpU. J43 N J Su-
per 98 (1993). en tvaii axm nijed
ihit 1 tener coottnung a cooieswoo
pnea The Sopmne Coun wUI re-
vKw bodi holdings.
his
nfe
adnuaible ((aas Ok deluidaa ine
lener wa oinKd o»er lo proeeraor i
by Ok wife 1 fiOier. wt» foua) a
amit ho daiifaefs^Po^f",^
ne helped her move The wife da no
Um her faOKt Dad found Ok leBer
The (mel ruled 0«M Ok oiaimal
ammmcam prmleje m Ok rula
of ev«teM does m apply >o • wrn-
m Biiemea oiai falls lao ok hands
of a Oitfd pany
And a • case Oial could provide I
peranal «|ury lawyers wMh a whole I
jKw lei ol pUauAs. Ok Coun will I
rcvaw an appeals coun l ruling OKI r
The*
sof I
oeah of her fiance has a doa eaaifh i
rdauoaafav a Ok vkubi a sue for 1
emoooal disnea. Prevausly. couns
have allowal sue* suai when Ok
plaiaiff ha a •■inarwal or nainae.
fanulal lelauonah^' wnh Ok vKiim
TlK opaan a Oa»*» v Crrjor.
261 NJ Super. 110 (19921. wnoen
by Afpeilaa DivtsMa ludce Howard
, 'fanaty' IS not a be ikiuiiiacd by
applieaica of • vertal (omala fan
rather by paiticulaneed snfiMawi a
I Ok aalaes of Ok aciual lelauooshsx
, ai t™* a OK csxxezi of Ok gals
, aoi^H a be served by Ok legal
"or.»or. No. 36ja.
coua be Ok laea na o( ibe OanJ
The FUCTEVER COMPLATON OF lUIXH PREiBENCES
ANDPROCEDUPiSINTHESTATCSTmCOUKR-
AVmSOURCEOF INFORMATION FOR EVERY ATTORNEY
AvUUBliNOWFORONUm DiSCOUVRTONCTmOINm
B00tCAliNEWJE»SEYUWJ0l)INALI00B*rai)MJ«5-
221
1U.S.NEWS
Gambling with the mob?
Wise guys have set their sights on the booming Indian casino business
Seatea in the largest Sen-
ate heanne room v/ith a
hood over his nead to
protect his identity, tne witness
identified oniv as "Marty ' had
some coniessions to maxe. Not
oniv had he helped the moo set
uD ana run a hieh-staKes bingo
nail on an Indian reservation.
he testilled. but be haa oadded
;;xDenses ana robbea tne inbe
01 over i600,000 a year.
But even Martv s sensational
:3les 01 flllinE bingo calls wiin
;eiium and awarainc 16O.OOO
:ars to oaid shills paiea m com-
ranson 10 nis next news ilasn.
Marty told members or the
Senate Select Committee on
Indian Affairs mat 12 otner in-
Jian bingo nails also were con-
trolled by the mot). "Organized
cnme is destroving tne Indian
reservation, he said in a slow.
.Tiechanical banione. nis voice
jeliberatelv aiiereo througn
the use ot a special macnine.
Four vears later, tne leaaers
ot the Indian gamoling inaus-
•,r\ are still smaning. Martv s
jDOcaivpiic visions 01 Mafia
aominaiion nave oeen proven
wrong, thev argue, aading tnat
InOian-owned casinos ana bineo halls 1
jre more heavijv reguiatea than tne I
Liutz palaces in Atlantic Cir\ and Las 1
Veeas. But wnile it s true that the in-
dustry has grown mucn more sopnisti- I
cated and has weeded out tne most ve- 1
nal operators, many questionable 1
cnaracters remain. From dozens of in- t
lerviews with federal, state and local I
law-eniorcement oilicials and from doc- 1
uments obtained througn the Freeaom 1
01 Intormaiion Act. L'.S. Sews nas 1
leamea of a number of cases mat raise 1
senous doubts about the integnry ana 1
inviolabilitv of Indian casinos.
The new oirtfalo. Devastated bv unem- <
ployment. substandard nousing and I
scnools and cnppung aiconoUsm. manv 1
Indians nave come to see eamoiina as \
•:he new buffalo" -the first true eco- 1
nomic opportunitv in two centuries. But 1
buflalo never paid dividends like a one-
armed bandit, in Connecticut, the I
sprawiicg Foxwooos Casmo owned bv 1
Bie-tinic entennise. The huge, new mancet in Indian-owned casinos is a araw tor venaon.
the MashantucKet Pequots could con-
ceivablv gross il billion tnis vear and
net half that amount. On the Shakopee
Mdewaxanton Dakota reservation near
Minneapolis, the Mvstic Lake casino
takes in so mucn casn that tnbal mem-
bers sometimes receive dividend checks
for up to S20.000 a person per month.
one official with the Bureau of Indian
Affairs says. And lust last month near
Syracuse. N.Y.. the Oneida Indians
opened the SIO million Turning Stone
Casino, exoected to rake m well over
SlOO million a vear.
Now that 73 tnbes in 19 states offer or
will soon offer full-scale casino gam-
bling, tne big ooys nave laxen notice.
Atlantic Citv casino owner Donald
Trump recentiv sueo the U.S. govern-
ment lor allegedly giving an untair ad-
■. antage to tnbes settine up casinos. And
he s out to prove tne Ifedgling industry is
comiDt. ".\ lot 01 the reservations are
being, at least to a cenain extent, run bv
I oreanized cnme. says Trump. "There s
I no protection. It s become a lOKe. "
Mobsters did. in tact, prey uoon Inai-
an eamoiine dunng the lysOs. Besiaes
Martv. wnose real name was Stewart
Siegel and who managed a California
bingo nail for the Barona Indians be-
fore he died ot cancer. Indian gam-
blings oist 01 characters was like some-
thing out of an Edward G. Robinson
movie. Just this spring. lor example, re-
puted Chicago mob boss John "No
.Nose DiFronzo and his gambling ex-
pen. Donald "The Wizard of Odds"
Angeiini. were convicted of conspiracy
ana fraud in a failed attempt to take
over gamoling operations at the Rincon
Reservation near San Diego in the late
'?0s. The Chicagoans nad hopea to
skim protits ana launaer moo monev.
FBI wiretaps snow in 1980. California s
Cabazon incian irioe nired as ineir
poKer-room manager one Rocco Zan-
gari. identified as a mooster in Senate
3)
. S..NEWS St WORLD REPORT. AUGUST 21 1993
84-760 0-94-8
222
tesiimonv. He was subsequentiv tired, i The Pennsvivania Cnme Commission
Later, after inoal Vice Chairman AJ- i savs that Henrv' "Zebo ' Zottola. ;".
trea .-Mvarez comolainea to local news- i was presioent oi Rocca s Italian Fooas
Dapers aoout ooiter-room sKimmine. i ano that Louis Raucci St.. 65. was an
.\Jvarez ana two otners were snot aeaa; i investor and employee. Zottola hems
;ne case nas never been solvea. collect payments lor the Michael Geno-
There s orooablv been a ieamme | vese crime tamilv from local loan
curve, ana oeODie have been oumed."
^avs Rick Hill ot the National Indian
Gaming Association. But Las Vegas
sharks, bookies and arug aealers. tne
coranussion says. Raucci was convicted
m 1990 on racketeenne. narcotics and
In an interview. Medure initially de-
nied knowine Raucci or Zottola. Later.
was an open town tor mobsters m the I tax violations ana is serving a 27-ycar
1930s, he adds, policed only bv a sheriff. | jaii sentence
"You aiwavs have to look at things rrom i
a tusioncai persoective."
TrumD s hyperbole not-
withstanaing, me vast ma-
iontv 01 the 175 total Indian
casinos ana bingo balls are
honest and clean. Many em-
ploy Las Veeas or Atlantic
Citv pros and have vieiianl
n-nouse security teams.
Several management com-
panies are pubucly traded
jnd have passea overlapping
layers oi government scruti-
ny. The FBI do. not see a
cooramated. cc.;cened ei-
!ort" bv orEanized-crime
lamthes to raid the Indian
2ambling mausin'. says Jim
Moodv. cnief ol the FBI's
oreanized-crime section.
There are no 'publicly
known ' cases oi current
mob inllltration
3ut ihe threat remams.
T.ie bureau nas six ongoing
i.Tvestieations — one more
;han wnen Mooay testified
^n Caoitoi Hill lUst a tew
Tiontns aeo. And when asked
.vnich cnme lamuies are in-
terested m Indian gamblmg. Moody re-
plied: "I don t know any that arm I."
The PmstnirOi road paver. The FBI is
.nvestieating a Pennsylvania asphalt-
companv owner wno manages a maior
casino in Minnesota and is expanding
nto tribal gambling in California. Okla-
.loma ana Ontano. Canada. L.S /^ews
nas leamea. .-Kngeio Medure. o4 oresi-
jent 01 Gaming World Iniemaiional.
has no cnminal record and
nas oassea the background
cnecKS reauirea lo manage
tne Shooting Star Casmo in
.Mahnomen. Mmn.. owned
pv tne White Eanh Band oi
Chippewa. No charges have
^een tiled agamsi him. But
•ne FBI became susoiaous
vhen 11 learnea Medure
eases a .New Castle. Pa.,
^arenouse to a oasta lirm
;nat was run m tne 1980s bv
-:Dutea moosters.
called Medure s condominium in Pom-
pano Beach. Fla.. and Medure s con-
struction comoanv. Medure savs ne nas
no organizea-crime linKS ana claims
Zottola simpiv called to aiscuss ware-
house remodeling plans.
Zottola acKnowiedged last weeK that
he called Medure repeatedly in 198b to
discuss the warenouse. He admits oeing
fnenas with men wno the cnme com-
mission says are Pittsburgh moosters
but clauns he has no link to the Mafia
and IS just an honest carpet salesman.
Althouen Zottola never aamitted it to
In the
MohawK Bineo Falace in Hogansour^. A. >'.. can seal up w 1. 700 plaven ai once.
he said he had met Zottola at the pasta I local FBI agents when they questioned
plant several times but claims ne was I him three months ago about Medure.
unaware oi Zottola s backeround. Con- I the calls did not stop in 1986. Zottola
iidential teleohone recoros obtained by | called Medure about eight months ago
U.S. i\ews confirm their reiaiionsnip. A I to discuss selling nim video-poker ma-
24-Dage summarv oi calls made in 1986 I chines to be usea at the Minnesota casi-
trom Zottola s Pittsburgh home reveals i no. Medure confirmed the call but savs
that Zottola called Medure s house and I he told Zottola he was not interested.
his trailer home in New Castle slx times i "IMedurel told me that anvtning he put
on March 21. 1986. On Mav v. Zottola i on that reservation had to be approved
by the state of Minnesota.
And 1 lust forgot about it al-
ter that.' Zottola adds.
The White Eanh tnbe has
had some cunous business
dealings in the past. In 1987.
before Medure became in-
solved. Carmen Ricci sold
30 video-poKer machines to
the trine. New Jersey otfi-
cials descnbe Ricci as an as-
sociate of the NIcodemo
Scanocnme family. .At that
time iney were ieettimate
3^ . T--.V..
'JWitfiiir^^w^iiidiMipiiibHiiK . i.to^
..."WBBJpi^'il^g'^opP'"''''" ^^ boomed: _^ . . ''
f^irtlWiBi ■nil ■ li r m~ gamblers bet between S7.5 billkxi end''
yjriUBMyiltfrlndian-owneO casinos, omgo nails ana cam moms. '
^tlibes Si 19 states offer or are about to begin . ' ~l[
;Aill^scale casino eamt>iing. ,"
.'sMashantucHet Pequot tnbe will enoand .
•tootcasino nexttmntn - 225 same tables. .
.jj^j^adkbexsmi ana a bingo nan ror L900 olayers. .
i. SMEWS i WORLD RETOBT. AUC15T Z3. 19S3
223
■ I.S.NEWS
businessmen. mbaJ Chairman DarreiJ
"Chip" Wadena savs.
Medure profits handsomelv from his
casino deal. His tirm eeis 35 percent of
:asino proiits - ai least S3 million a vear.
Chairman Wadena lought to increase
Medure s taxe bv 5 percent, at his own
moe s exDense. out a lederaJ mediator
rerused. .Medure nas plans to manage
casinos lor ine Hopland Band of Pomo
Indians and the Cloveraale Pomo Indi-
ans in Nonhem Califorma. ana the Rat-
ponage First Nation near Kenora m On-
tano. His firm also plans to manage a
bingo hall, set to open this weeK. for the
Seneca-Cavuga tnbe in Mi-
ami. Okla.
The stn|>-4iar owner. Res-
taurant owner Robert Sabes
was well known in Minne-
iDolis as a millionaire busi-
nessman. So locals were
narolv suronsea wnen ne cre-
-jiea a successnii casmo man-
^eement iirm called Gaming
Corp. 01 America. But trou-
oles began inis spring wnen
Mississiopi earning regula-
lOrs leameo tnat Sabes owns
J topless Bar m Minneapohs
where the entertainment was
managed bv Michael Peter, a
flashv South Honda million-
aire with a nationwide chain
ot stnp-tease oars called Sol-
id Gold. Peter was indicted m
1991 on exionion and Icidnap-
pme charges, and the case is
pending m state coun. Fed-
eral agents seized thousands
01 Peter s documents at
.iDOut the same time, citing
concern over txjssibie orga-
nizea-cnme ties. No federal
charges nave oeen filed.
Sabes denies anv mob links and says
he had "an arm s length" relationship
with Peter. But the embarrassment and
the licensing delays to come persuaded
Sabes to sell his Gammg Cort3. stock
last April and leave the publiciv traded
firm. Althougn one tnbe quicklv cut all
lies to the restaurateur, others contmue
to seek his busme&s. Earlv last month.
Saties won prelimmarv approval from
.Arizona s Vavapai-Apacnes to manage
their proposed casmo nonn of Phoenut.
New evidence oi a more troubling rcla-
tionshiD mav jeopardize those oians. too.
1 In testimonv 10 the Wisconsin Wjnneba-
; \ go gaming commission released this
month. Sabes admits also doing business
with James Williams, a partner m Peter s
stno-oar emoire ana once a major bingo
hall operator tor Indian tnbes and chan-
ties from California to Flonda. Williams
was convicted in 1987 ot failing to pay
taxes on some $300,000 he earned from
bingo halls. Flonda police records call
him a "close associate" of Anthonv Ac-
cctturo s. whom the FBI has identified as
a capo, or boss, of the Thomas Luchese
crime lamily of New York. Williams, who
did not return phone calls, admits m the
police files only to meeting Accetturo
three times in the 1970s.
In a recent mterview, Sabes admined
that he siened papers with Williams as
early as Nov. 9. 1988. That was just
four months before Williams was
locked up, prison officials sav. But he
savs he did not learn of Williams s con-
cominission report claims cenain bingo
operations m the ^oungsiown. Ohio.
area "are obbgated to purcnase bingo
supplies from Nannicola. '
Nannicola says his firm sells supplies in
25 sutes and got the Tamiami contract
because of supenor service and pnce. He
demes that his father-in-law or his busi-
ness has mob ties: "The Pennsylvania
Crime Commission should get some new
employees and some new mformation.
Despite the allegauons. the National
Indian Gammg Commission has never
done a background check on Nanmcola
Wholesale or Tanaatni Partners. One
reason: Although Congress created the
commission five years ago to regulate
Mlnaeiou l«t». Mvstic Lake casino rtponedty earns each mbal memoer up to $20,000 a morun.
viction or alleged Mafia ties until 1990.
Tha btaso papw sappttir. When Flon-
da's Miccosukee Indians opened a 2.000-
seat bingo hall west of Miami m 1991, they
hired Tamiami Panners to run it. Two
years later the tnbe kicked the firm out.
allegmg mob ties. Tamiami parmer Cye
Mandel denies the charges and has sued
the tnbe for cuttmg hun out of the ven-
ture, which last year grossed S35 million.
One ihmg is sure: Tamiami did sign a
contraa with a bingo paper supplier au-
ihonties have linked to the mob.
After a bidding process, Tanuami be-
gan buving supplies from Frank Nanni-
cola of Warren, Ohio. Nannicola is the
son-in-law of Charles Imburgia, who, ac-
cording to the Pennsylvania Crime Com-
mission, IS a member of the Genovese
crime family in Pittsbureh, A 1992 crime
Indian gaming, its rules didn't take effect
until six months ago. The commission has
a massive backlog of old and new man-
agement contracts to review.
Just such snags prompted members of
Congress to meet this summer to discuss
tightenmg Indian gamblmg laws, and a
new Senate bill likely will be introduced
next month. National Indian Gammg As-
soaation Chairman Rick Hill says the
tnbes want the cleanest industry possi-
ble. But thev also want to ensure that a
few questionable charaaers do not bnng
rum to an industry that employs thou-
sands and has nelped tnbes build mucn-
needed scnools. hospitals and homes.
"It's a bread-and-butter issue, ' Hill savs.
"We need Indian gammg to survive. " a
BY James PcPMN
USNEWS & WORLD RITOFT. AUJUST a 199B
224
^:S:N6=^2;«/5
?AGS i
:rd story oi LavsX 1 printed in FULL fomat.
i>roprl*tary ro the anitsd Praas International 1993
January 37, :.992, Monday, 3C cycle
JECTIONi :ieqional Neva
OZSTKIBUTION: Illlnola
LSNGTH: SSO worda
:{SXDLZNSi Jleputad Ctiicacre veto boaaea arraigned
3YUNE: 3y HILMER ANDSIUOM
3ATELZin:: SAK DIEGO
.BYWORD: CA-KOB
300YX
Saa "Winga" Carliai, ^he reputed acting boaa of CHlcage'a Mafia accused
oi trying to take over gambling operatlona on an Indian reaervation, pleaded
innocent to racketeering cAargea Monday along with a group of alleged
Ileutenanta and aaaooiatea.
carliai appeared before U.S. Slatrict Judge Willlew £. 2nrlght for the
firat tiae aince be vaa indicted Jan. lO with eight other defendanta, including
alleged aobstera John OiFronxo, 2on Angellni and Michael Caracci.
The nine defendanta aat quietly aaong the handful of apectatsra in Enright'a
sourtrooa until it vaa their turn to crowd around the podiua with an equal
nuBber of attorney a.
Zlght pleaded Innocent, rhe ninth, Chria ?etti, ^sleaded innocent laat vaak
ind vaa in court for a oail hearing.
'It vaa kind of nice co aee seme of ay old acquaintancaa up there," said
Art ?hlzenaayer, the head of the FBI 'a organized crime unit in San Diego vho
larliar had worked in Chicago.
3«cauee the caae la baaed primarily on several thouaand pages of wiretaps
ind supporting documenta, It ia expected to take several months to reach trial.
A motion hearing vaa scheduled for June a.
carliai ia the lead defendant in a 15-count indictment that accuaea the
sob of trying to gain control over gaabling operatlona at a planned caaino on an
Indian reservation easi of San oiego.
.ia was described in the indictment aa a ''':rew cnief' vho ran iihinqs on
Chicaqe''a West Side for the organization, fsundad by Al Capone, untiil 1987 vnen
le was anointed aoting boss after Joaaph Aluppa and undarboss Jack Cerone war*
sent to prison and heir-apparent Joeepn Famola's health deterierataa.
rhe alleged plan to take over gambling at the Rincon Indian Reaervation vaa
-^resented to the moo leaoerahlp througn Caracci by ?etti, i Cicero, :il..
225
jgi^r by: : b- 4-93 ;n:33AI« ; LAW C=Fi:£5-' CLAP? EIScNBER3;827
PACE 7
Proprietary to the unltsd press International, January 27. 1992
tiv« whom authorltisa b«li«v* has bawi tba faaily'a man in San Dlago alnea tha
70a.
Patti allaqadly oenaplrad to win tha aanageaant contract with Glan Calac,
s contaot on tha raaarvatlon, and Nlcholaa Da Panto, a San Oiago lawyar who
alt with tha Sincon Tribal Cotinoil on Fatti's bahal£.
Patti'a alla^ad uanatrvaringa , howavar, wara aonitorad by tha FBI and San
age lav enf oroaaant of f icars who wara authorizad to conduct ' ' roving
rataps" that allowad thaa to liatan in on phona calls sada at pay pbonas and
OB 0« Panto's offioa.
"Tha dafandant ( Pattl) usas tha phona to coaait hia criaaa," Asaiataat
B. Attomay Carol Laa told Enright.
Carlisi, OlFronso and Angalini allagadly vara villing to put up aenay for
• allagad takaovar atteapt and bad a Florida aan pickad out to act aa aanagar,
t thay pullad out latar bacauaa thay vara loaing aonay on a siailar
sarvation caalno in Baltiaora.
Tha vhite-halrad Angalini, in court on tha day aftar tha Supar Bovl, is
etar known in lav antorcaaant cirolas as ''Tha Nicard of Odda," tha aan who
La tha vital sports batting linas that are used by bookaakcrs acroaa the
intry.
Tha indietaant also oontaina extortion charges steaaing froa Petti 'a
Lagad efforts to collect aoney froa gaablers with the help of co- defendants
raen and Anthony Di Nunzio of Los Angeles and John Spilotro.
Spilotro, identified as a aob aaaooiate froa Laa Vegas and brother of tha
:a Tony "The Ant" Spilotro, the aob's reputed overseer in Las Vegas vho was
rdared in 1»86.
All of the defendanta except carraoi, Petti and Anthony DiNunzio have been
le on bond. Caraen Di Nunslo reaalns a fugitive.
226
PAGE
1ST STORY of Level 2 printed in FULL format.
Copyright 1993 Star Tribune
Star Tribune
July 4, 1993, Metro Edition
SECTION: News; Pg. lA
LENGTH: 27 3 3 words
HEADLINE: Winnebago case illustrates casino business gone awry
BYLINE: Pat Doyle; Staff Writer
DATELINE: Madison, Wis.
BODY:
Tribal tensions, shootings and arson erupted while Glenn Corrie managed a
Wisconsin Winnebago Nation casino. His guilty plea to bribery closed a phase o
a case that offers a rare look at a business gone awry.
Two dozen American Indians sat on benches in the courtroom, silent spectato.
in one of the last acts of a drama about temptation and corruption.
They watched Chicagoan Glenn Corrie, burly and bearded in a gray shirt, tii
and sport coat, sitting at the defense table. Was it true he once controlled
lucrative Indian casinos by paying some tribal officials up to $ 120,000 in
bribes?
"No doubt it was more, your honor," Corrie said.
In pleading guilty last month in federal court to bribery, Corrie closed a
crucial phase of a case that offers a rare look at a casino business gone awry
For nearly two years the Wisconsin Winnebago Nation lost control of a
fledgling business born of tribal sovereignty. Longstanding tribal tensions
erupted under Corrie' s management, climaxing with shootings and arson at the
tribe's casino near the Wisconsin Dells. -
While other tribes were parlaying casino profits into public-works project:
or monthly revenue-sharing checks, the Winnebago were paralyzed by turmoil. Tht
ramifications continue even as the tribe today reports success under new casinc
management.
The Indians are still trying to recover the $ 2 million Corrie was paid ~^
while illegally managing the casinos. Federal and tribal officials say they
can't account for another S 3.7 million in casino revenue intended for the
tribe.
And prosecutors expect to charge tribal members this summer with taking
bribes from Corrie.
/
r
In Indian communities where one in four adults was jobless, the temptation
of casino money was powerful, said tribal member Orbert Goodbear.
227
star Tribune, July 4, 1993
"When I was a kid, my grandparents used to sell baskets along the highway,'
Goodbear said. "Our people don't come from a prosperous background, and for tht
reason, money sways people. I don't approve of it, but I understand it."
The Winnebago experience is perhaps the clearest illustration yet of the
challenge facing the federal government. It must regulate casinos to protect
Indians without violating the autonomy of Indian tribes.
The Wisconsin Winnebago have 4,700 members, about half of them living in
western and central Wisconsin. Other members settled mainly in southeastern
Minnesota, the Twin Cities, Madison and Milwaukee.
Their legacy is tragic even in the context of American Indian history. In
the iseos the federal government forcibly moved the Winnebago people from
Minnesota to the Dakota territory and later sent other members from Wisconsin •
Nebraska. Many starved or froze to death.
"The case of these Winnebago Indians is one of peculiar hardship," a feder.
official for Indian affairs wrote in 1863.
Some among the Winnebago returned to Wisconsin, where today their
descendants live on parcels of land held in trust by the Department of the
Interior. In the 1980s the Winnebago were running successful bingo games on so:
of that land when the Supreme Court and Congress allowed tribes to start a mor.
lucrative and tantalizing business: Vegas-style casino gambling. The ventures
promised to reduce poverty in Indian communities.
But the new opportunity also stimulated the appetite of outsiders looking
for a piece of the action.
One of those was Corrie. He is 48 years old with a formal education that
ended in his freshman year of high school. For years he had operated out of
suburban Chicago, supplying gambling equipment to Illinois charities. In early
1990, as tribes ventured into casino gambling, Corrie headed to Wisconsin.
He checked out several tribal casinos before getting involved with the
Winnebago. He learned that some tribes were sophisticated, while others were
struggling with the basics.
At the Menominee Reservation, "The dealers were running into a room watchi:
a videotape trying to learn what they were supposed to be doing," Susan Kelled-
a Corrie associate, said in a deposition. "Glenn had mentioned that they reall
didn't know what they were doing . . . were probably losing a lot of money."
Corrie, through his lawyer, declined to comment last week about his
operations. In court proceedings he cited Fifth Amendment privileges against
self-incrimination to deflect questions about his operation, his past employraer
and other issues.
But sworn depositions and interviews with his associates, casino employees,
prosecutors, police and tribal officials offer a look at how the Winnebago
casinos worked - and didn't work.
Corrie, operating as the Jenna Corp., began managing casinos near Wisconsii
Dells, Nekoosa and Black River Falls for the Winnebago in May 1990. His
228
star Tribune, July 4, 1993
contract for up to 40 percent of the profit was more than typically allowed
under federal law. The Interior Department later said the cut was too generous
and criticized other provisions beneficial to Corrie.
But Corrie would manage the casinos for the next 2 0 months without the
necessary federal approval.
Jeffrey Behnke worked in construction and waited tables before landing a jc
as a security officer at the Ho-Chunk casino near Wisconsin Dells. Within three
months, Corrie promoted Behnke, who is not a tribal member, to be a manager of
the casino, the tribe's largest.
"You went from no experience to management?" Assistant U.S. Attorney Mark
Cameli asked him during a deposition.
"It was a moron's job," Behnke replied.
In any case, the management of the Ho-Chunk ran into problems.
Samantha Day, a tribal member who worked at the Ho-Chunk, said money eraptit
from gambling machines sometimes didn't jibe with the machines' meters. On at
least one occasion, Corrie associates from Las Vegas told employees not to mine
the discrepancy; they'd sort it out.
Tribal representatives were on hand to monitor the money, but, "They were
more confused than I was," Day testified. "They never knew how to do the
paperwork at all. They never saw it."
Cameli asked Day, "What kind of check and balance did the tribal employees
have?"
"The representatives never really did," Day replied.
She also said the casino lent money to bettors without a clear policy.
"Sometimes they took chips right off the table," Day said. "Sometimes they got
the money from the cashiers."
She recalled a businessman from the Wisconsin Dells receiving S 1,300 in
credit. Another person "would go right into the office and get chips and play.
"We were told if we didn't treat these people good, we would get fired. It
was mostly people [the management] thought spent a lot of money. It didn't
matter how much credit they wanted, you were to give it to them."
Corrie paid the motel bill for a regular customer who stayed overnight, anc
handed out cards allowing others to bill him for meals at local restaurants. Da
said.
A woman who joined Corrie on a trip to Las Vegas "came in and wrote out a
check for their expenses. She cashed it right there at the casino. No one
questioned her."
Day told of times when an influential tribal member "would be really angry
. . and call [Corrie] up and say, 'You will lose my support.' Half an hour late
a check would come in to him . . . and they cashed it right there."
229
star Tribune, July 4, 1993
The rewards for backing Corrie were sometimes visible. Tribal members still
talk about favored Indians being allowed to drive Corrie' s Cadillac around tne
reservation.
"There was an atmosphere of corruption," Goodbear said. "It's common
knowledge that if someone is a [tribal] area representative, his friends get a
job. "
Tribal members who didn't support Corrie say they saw few benefits from the
casino. Instead, they saw basic tribal services decline.
Helen Cloud, 58, said her federally subsidized payments for diabetes
medication, funneled through a tribal health clinic, were interrupted.
"We're poor as it is," said her husband, Jake, 66. "They couldn't buy me fo
any amount of money. I'm glad I was on the other side. He paid the boys off."
Turmoil among the Winnebago didn't begin with Corrie. But Gome's
management of the casinos fanned tensions to a flashpoint.
It wasn't long before allegations surfaced that he used patronage ]obs,
kickbacks of cash and gifts and other favors to maintain political support from
some Winnebago.
"When Glenn Corrie came into our midst and began to influence some of the
tribal members, he began the process of corrupting our whole tribal government,
said JoAnn Jones, who won election in 1991 to tribal chair on a campaign to
evict Corrie.
Soon the Winnebago Nation became so divided over Corrie that its government
disintegrated, failing to muster a quorum to conduct tribal council meetings.
Without a tribal government it could recognize, the U.S. Bureau of Indian
Affairs (BIA) slowed S 1 million in federal money intended for Winnebago
members. The BIA said the disintegration of tribal government also made it
impossible to approve a casino management contract - even if one existed with
terms more favorable to the tribe.
But Corrie didn't stop for lack of BIA approval. He had enough support amon
some tribal officials and a security force to stay in business.
Tension erupted a year into his tenure when tribal chair Jones led 100
followers to the Ho-Chunk in the first of a series of confrontations. During th
next six months, combatants brandished ax handles, blockaded entrances, fired
guns and hauled a hangman's noose to the casino.
"I could see bloodshed coming," said Sauk County Sheriff Virgil (Butch)
Steinhorst, who lacked authority to investigate tribal complaints.
At first, the BIA, unsure of who really represented the Winnebago, avoided
moving against Corrie. His c-ponents converged on the BIA offices in Minneapoli
in protest.
Jones kept up the pressure and after months of turmoil the BIA asked the
Justice Department to intervene. The Justice Department moved to evict Corrie,
230
star Tribune, July 4, 1993
the first time it had taken such action against the manager of a tribal casino
in the Upper Midwest.
The U.S. attorney in Madison declared that Corrie "threatens the economic
security and well-being of the tribe" by operating without a federally approvec
contract. Corrie's lawyers pitched a federal judge a remarkable defense: Becaui
the Winnebago no longer had a functioning government, they couldn't enter into
contract. Therefore, there was nothing for the BIA to approve or reject.
U.S. District Judge John Shabaz was having none of it. Calling the tactic
"sopnistry" and a "ridiculous argument," Shabaz kicked Corrie out of the
Winnebago casinos and ordered him to return S 2 million in management fees to
the Winnebago.
The two sides had a final standoff at the Ho-Chunk. Corrie allies barricaat
themselves inside the casino with chairs and cigarette machines. Two tribal
members were wounded by gunfire, allegedly from a Jones supporter. Another Jont
supporter, Steve Funmaker, filled juice bottles with gasoline and started a
fire.
"I did [it] ... so Corrie couldn't get ahold of it again," saia FunnaKer
who is serving a 33-raonth prison term for the arson, which caused minor aamage
and no injuries. "Why should he have the benefit of the proceeds from that at
the expense of tribal people?"
The court order ended casino business for Corrie. Today, the tribal
government is running again, and the tribe reports that its casino business ha;
expanded, tripling the number of ]obs that existed two years ago and financing
new tribal enterprises.
The BIA's area director Earl Barlow and Wisconsin area super intenaent Robe;
Jaeger recently visited Winnebago communities. "We were both quite inpressed a"
the progress they were making," Jaeger said. He said the casinos, now managed .
firms that receive a lower cut than Corrie, are succeeding.
"We have not fully recovered, but we have made progress and we nave
learned," Jones told a U.S. House subcommittee last week ac a hearing on India,
casino gambling in Oneida, Wis.
One thing the Winnebago haven't recovered: the $ 2 million. Corrie hid his
assets in bankruptcy proceedings, a bankruptcy trustee said.
In the living room of Helen and Jake Cloud's home near Lake Delton, tomahawi
and eagle feathers hang near a display of American flags on pedestals, a fitti;
arrangement for citizens of two nations.
The Clouds and other Winnebago watched their tribal government cisintegratc
into anarchy in the dispute over Corrie. They waited for their other nation to
intervene.
Just .how much regulation the federal government should exercise over India;
casinos is a matter of debate in Congress and among tribal memDers. -auaaole di
sometimes competing goals collide: respecting tribal independence while
preventing exploitation.
231
star Tribune, July 4, 1993
"There's a difficult balance the government has to reach between recognizir.
autonomy within Indian nations and regulating gaming operations so the tribes
benefit the most," Cameli said.
Federal prosecutors haven't intervened in every instance in which casino
management firms operated without first obtaining BIA approval. The Justice
Departmem: took action with the Winnebago case because the potential for trouDl
vas greater.
"You look at the cases that present the greatest threat," Assistant U.S.
Attorney Cameli said. "Unlike the other tribes, where at least the governing
bodies agreed to hire a company, you had the tribe sharply diviaed over the
presence" of Corrie.
The tribe's experience with Come occurred while Indian gaming was under
the jurisdiction of the BIA, wnich complained it had limited powers co regulate
casinos. Recently the National Indian Gaming Commission has taken over the tod.
"I think oefore it becomes a smooth ooeration it will go c.nrougn r.any
refinements," Cameli said. "It's different than anyt.^iinq else the government's
oeen involved in."
The commission was designed to regulate tribal gaming. It has powers the 51
lacked and should do better, said Jaeger, the BIA's Wisconsin superincenaent .
Many tribal members are ambivalent about federal regulation of casinos.
When asked what he thought, Goodbear said, "I think the federal government
should let the tribes operate indeoendently . " Then he paused, and added, "But c
the other hand, I think the federal government has a responsibility to make sur
these tribes don't get into messes. I think there should be close accounting
done on these casinos."
Corrie faces the prosoect or following his adversary, FunmaKer, to prison. .
^las agreed to cooperate with federal prosecutors in their investigation or
tribal orficiais wno toox illegal payments. He also will reveal assets m t.ne
oankruptcv case. He wasn't always so talkative. Cameii once oegan a deposition
by posing' a seemingly simple question: How long had Corrie livea m Wisconsin?
"I respectfully refuse to answer that questi^^n on the grounds it may tena t
incriminate me," Corrie replied.
Said Goodbear' s wife, Barbara: "I think Glenn Corrie is going to bargain
vith the federal government, turn in a bunch of names and get less time."
Corrie's attorney, Jeffrey Steinoack, said that his client doesn't deserve
all of the blame for the fiasco and that he tried to help the tribe manage the
new business. "I always thougnt bribery was the other side of the com from
axtortion," Steinback said.
In the courtroom in Madison last month, Jones and otners vno rougnt to oust
Tome listened as Assistant U.S. Attorney John Vaudreuil described the
corruption. There were envelopes of cash for tribal officials, cnecks issuea tc
-he sister of one tribal official. A $ 1,000 check was made out for the
fictitious purchase of a trailer. Corrie handed out S 300 to S 500 when tribal
.-Tiemoers asKed for "a pack of cigarettes."
232
star Tribune, July 4, 1993
Out in the hall, Dallas Whitewing said Corrie offered him money and a job
after he won a seat on the trioal council. Whitewing said he took the money,
gave it to a charity and went to work for Jones. "All the influence Corrie
thought he had," Whitewing said, "it's gone."
GRAPHIC: Photograph; Map
SUBJECT: bribery; investigation; Indian; gambling; finance
233
Mr. Richardson. The gentleman from Wyoming.
Mr. Thomas. Thank you, Mr. Chairman.
I have just some brief questions, and if you have brief answers,
that could be nice.
Mr. Torricelli, I am pleased that you are as interested in the
States' role. That is not always the case here in the Congress.
Many of the compacts have included agreements on taxes, on
regulation. Why didn't New Jersey enter into one of those?
Mr. Torricelli. Well, in fact, New Jersey has not yet been sued.
My guess is, we are going to have a problem in New Jersey if the
Ramapough Indians are able to establish themselves as a legiti-
mate tribe. They will go to court, and, under the current state of
Federal law, have a very good chance of succeeding, in which case
New Jersey will have an unregulated casino, untaxed, to compete
with our other 18 casinos — 12 casinos.
Mr. Thomas. So you don't have any tribes that qualify under the
law now?
Mr. Torricelli. No, but unfortunately we are getting very close
in what, in my judgment, is an aberration. We do not actually have
any legitimate Indian tribes in New Jersey, in my judgment.
Mr. Thomas. Mr. Trump, you have not concealed your concern
about competition with your investments, and I understand that.
Would you be satisfied if the State regulated these other casinos?
Mr. Trump. Well, I think that it is a very sad thing for the
States. I can tell you that I believe it is 49 out of 50 governors are
totally against what has taken place.
I know that for a fact Governor Cuomo was forced to sign a pact
that he totally didn't want to sign. The communities are up in arms
in upstate New York, totally up in arms, and it has just gotten out
of control.
You see, I have a very big psychological problem here. I really
don't know if it is possible to protect all of the people from all of
these reservations. You have too many sources in terms of orga-
nized crime, you have just too many places, and so we can say,
well, we will put 500 FBI agents on each reservation. But from a
practical standpoint you can't do that.
So with all of these reservations opening up, and literally open-
ing up on a daily basis, it seems to me, I don't know if it is phys-
ically possible, physically possible, for law enforcement to any
longer protect.
Before, you had Las Vegas and you had Atlantic City, and I used
to hear stories that there were more agents assigned to Las Vegas
and Atlantic City than to any other major city in the United
States. Now I don't know if that is correct or not, but I believe it
was very correct. In fact, it was even a substantial amount more.
I don't believe that you have enough people when you start get-
ting into this many reservations. The money is too much, and it is
there, and it is too easy. It is too easy to skim if you don't have
the right law enforcement. It is too easy to skim if you don't have
the right procedures. It is too easy to launder money if you don't
have the right procedures and the right law enforcement.
So I think you folks have a real problem. I'll be honest. I think
you have a real problem. You created a monster. When you were
in Las Vegas and when you were in Atlantic City, you had two
234
places, and you can have 500 agents in each place, and you can do
your number. But when you start having 100 and 150 locations all
over the place, I think you have created yourself a real mess.
Mr. Thomas. So you have basically opposed to gambling outside
of Atlantic City and Las Vegas?
Mr. Trump. I am opposed to gambling when it can't be policed,
and I don't believe the Indian reservations can be policed, there's
too many of them, and especially when people claim sovereignty
when, in fact, there is nothing sovereign. It is only sovereign in
that they don't pay taxes.
Mr. Thomas. Someone indicated — ^it wasn't you, obviously — that
casinos were very concerned about their image; if it became known,
as you say it is generally known, that organized crime is there,
they wouldn't patronize them. Wouldn't that be the case? Why are
you concerned?
Mr. TllUMP. Well, I am very concerned about the Indians' image
in terms of gaming because when it blows — and, as I said before,
it will blow — that is going to taint the entire industry, including
Atlantic City and including Las Vegas.
When it is learned about the laundering and all of the skimming
and all of the cheating and everything else that can go on unabated
at the Indian reservations, people aren't going to say that is just
Indian reservations, they are going to say that is Atlantic City,
that is Las Vegas, despite the fact that Trump has hundreds and
hundreds of people in each casino policing and making sure every-
thing is legit, they are not going to say that. They are going to say
that gaming is a dirty business, look what happened at this par-
ticular casino.
So when it blows, it is going to be a huge story. There is no doubt
about the fact it is going to blow. It is just a question of time. But
that is going to taint the whole industry, including the legitimate
industry.
Mr. Thomas. Thank you, Mr. Chairman.
Mr. Trump. Thank you, sir.
Mr. Richardson. The chair recognizes the gentleman from Ha-
waii.
Mr. Abercrombie. Mr. Trump, you said you don't have any prob-
lem with competition.
Mr. Trump. That is absolutely correct, sir.
Mr. Abercrombie. There have been suggestions by the Internal
Revenue Service and other governmental agencies' representatives
this morning that, with some modification of the 1988 gaming laws,
that regulation — administrative oversight could be put into place.
Now do I understand you to say that if that is the case, then you
are perfectly willing to compete?
Mr. Trump. I can get other representatives of the Internal Reve-
nue, I believe, to say the exact opposite. I can get representatives
of the FBI, I believe, to say the exact opposite.
Mr. Abercrombie. That is not my question.
Mr. Trump. I do not believe that you can correct this situation.
I do not believe
Mr. Abercrombie. Why do you not believe that?
Mr. Trump. I do not believe that by just
Mr. Abercrombie. Does that have something to do with Indians?
235
Mr. Trump. No. It has something to do with organized crime.
Mr. Abercrombie. Organized crime can get the Indians but not
to you?
Mr. Trump. No. I don't beUeve that organized crime can stay
with us for a very long period; they will be caught. I do not believe
they can be caught on an Indian reservation. I am not saying that
we can't have individual transactions go wrong, but they will be
caught. We have every check and balance. I am talking beyond law
enforcement. We have every check and balance.
But do you know what is nice about us? We can say, "Hey, the
bad guys are on here; call the FBI; call the Casino Control Com-
mission, call the sheriff, call the U.S. attorney." The Indians can't
do that to the same extent. They don't have the checks and bal-
ances.
Mr. Abercrombie. Why are the Indians incapable of doing that?
Mr. Trump. If you look at their security systems, if you look at
what they have installed in their casinos
Mr. Abercrombie. Try answering my question.
Mr. Trump. If you look — I am not saying anything
Mr. Abercrombie. Try answering my question.
Mr. Trump. I am answering your question very nicely, sir.
Mr. Abercrombie. No, you are not. You are avoiding answering
the question.
Mr. Trump. I mean I don't think you want to hear the real an-
swer. That is the problem. If you look
Mr. Abercrombie. The real answer is, you don't believe that if
the same regulations with respect to the IRS, the same kind of
Banking Security Act, the same kind of vigilance is put forward on
Indian reservations and with respect to gambling and gaming
where Indian tribes are concerned, your contention is, they will not
be able to exercise the same vigilance that takes place in Atlantic
City at your casinos or in Nevada.
Mr. Trump. My contention is that there are too many places, and
if they are going to go under the cry of sovereignty where they
don't have the same powers — where this Government doesn't have
the same police powers over them, I say that there is absolutely no
way that you are going to keep the mob out of the Indian reserva-
tions, and therefore
Mr. Abercrombie. Let's move to the question of sovereignty.
Mr. Trump. And therefore that cannot be met.
Mr. Abercrombie. Let's move to the question of sovereignty
then. You indicate that they don't pay taxes.
Mr. Trump. I didn't indicate they don't pay taxes. I said they are
not paying taxes on casinos, and they are not paying taxes on
Mr. Abercrombie. That is because the profits from it are to go
to the reservations.
Mr. Trump. Oh really? What about the $400 million profit
Mr. Abercrombie. Yes, the profits by law.
Mr. Trump. What about the $400 million profit that they get, the
300 Indians?
Mr. Abercrombie. If you would — ^Mr. Trump, if you would get
less rhetorical and more back to the facts, I think we could get
somewhere with this testimony.
236
The profits go back to the reservation, go back for expenditures
on behalf of Indians. Therefore, a logical person — ^you are the one
who has brought up the question of, it stands to reason, and we
have to use common sense — it is common sense that it is in the in-
terests of Indian tribes to see that the games are run honestly, be-
cause the more money that comes into the tribe, the more that can
be spent on the reservation on behalf of Indian children, on behalf
of elderly people, the same people that you have expressed an in-
terest in.
Mr. Trump. Respectfully, sir, I really don't believe you under-
stand, and if you do, then we have a bigger problem.
What we have is, when the tough guys, the bad guys, walk on
to that reservation, I really don't believe that an Indian leader will
be able to tell that gentleman to get the hell off.
Mr. Abercrombie. Like you can,
Mr. Trump. Like I can. You know why? Because I have a lot of
backup. I have the United States Government, I have FBI, I have
U.S. attorneys, I have all of these people as my backup. They don't
have the backup. They want to be sovereign.
Mr. Abercrombie. Have you read the gaming law?
Mr. Trump. Yes, I have read the gaming law.
Mr. Abercrombie. Then you know perfectly well that the tribes
have at their ability to come in, the Department of the Interior, the
gaming commissions, the States themselves under the compact reg-
ulations. What you are sa3ang is
Mr. Trump. Have thev ever done it?
Mr. Abercrombie [continuing]. Is that they will not be able
to — they certainly won't be able to do it if they don't get the co-
operation of the States or of the Federal Government, and what we
are here to see happens is that Indian tribes that have had their
rights violated in every single instance with every single treaty, at
least as far as this Member is concerned and I think this commit-
tee is concerned and Members of this Congress are concerned, is
not going to happen again.
If you want competition, and you say you do, I think you are
going to be able to get it, and they will come under the same kind
of competition, under the same kind of regulations and vigilance as
you are calling for.
Mr. Trump. Sir, I think you are kidding yourself, respectfully,
and I would just like to add, you have in Connecticut a tribe that
is going to make, I think, $500 million profit — profit — ^this year. I
believe that tribe has 300 members, maybe it has 400, but it has
a very small number of members.
I would like to know, when you say they go back and they give
the money to themselves and they reinvest, do you think it is ap-
propriate that the 300 people who happen to have lucked out in a
sense by having a reservation between Manhattan and Boston — do
you think it is appropriate that that money be spent on those 300
people, or do you think maybe, now maybe, that money should be
spread for all Indians all over the Nation, many of which don't
have the luck of being next to Boston or New York City?
Mr. Abercrombie. It is probably at least as appropriate as all
the money that was taken in all the leveraged buyouts and the
mergers and all the other kind of activity that took place
237
Mr. Trump. Right, and put a lot of people to work.
Mr. Abercrombie [continuing]. Among the two or 300 people in
New York City over the last decade and a half.
Mr. Trump. And put a lot of people to work, sir.
Mr. Abercrombie. So do the casinos.
Mr. TORRICELLI. Mr. Abercrombie, may I respond to your points?
Mr. Abercrombie. Certainly.
Mr. Torricelli. I think that as you seek answers to your own
questions.
Mr. Abercrombie. I beg your pardon? I am sorry.
Mr. Torricelli. As you seek answers in your mind to your own
questions, I think there are several things you should keep in
mind.
First, we have the reality of an inspector general's report which
cites not the theory but fact that Indians themselves are being
cheated by management companies and sometimes their own lead-
ership to the tune of millions of dollars.
Second, the principal problem of keeping organized crime off
these reservations isn't only one of law enforcement agencies find-
ing them, but in many of these instances it isn't even against the
law. There is nothing, per se, against the law for an Indian tribe
to go to a company to manage its casinos which has organized
crime figures in it; no law is violated, no regulation.
Third, on the question of the compacts, your point would be well
taken on the question of the State compacts if everybody had a
State compact and those State compacts all provided for what you
cited. A third of the reservations have no compacts. Many of the
remainder, as in the State of New York, as Mr. Trump cited,
reached compacts under the pressure of Federal courts, they did
not want to do so, and all of them do not provide for the provisions
that you cited.
Therefore, the kind of agreements that you would hope would be
in place, on money laundering, on background checks simply, trag-
ically, do not exist.
Mr. Abercrombie. Thank you, Mr. Torricelli. I think that is the
reason that we are holding the hesirings. I can assure you that this
Member is paying close attention to what you are suggesting, is
paying close attention to the suggestions from the IRS and the
other law enforcement individuals that have appeared before us,
and as far as I am concerned, I think if we can address those prob-
lems, then maybe many of the contentions now being made will be
taken care of.
Finally, let me say for the record that I think that while the pas-
sion involved in this discussion to this point is understandable, I
think it is a disservice, at a minimum, to the Indian tribes which
have come under the gaming law as passed in 1988 to indicate that
they would be any less interested in keeping organized crime out,
any less capable of making that kind of commitment, and that it
is a vestige of a patronizing attitude, not from you, Mr. Torricelli,
but a vestige of a patronizing attitude on the part of the general
public should they accept Mr, Trump's contention that they are in-
capable of dealing with this situation, of presumably even wanting
to deal with this situation. That I do not think will succeed with
this committee, and as far as that is concerned, Mr. Trump
238
Mr. Trump. I never said that, sir, and I think you know I never
said that.
Mr. Abercrombie. If you want to pursue that line of reasoning,
if you want to pursue that line of argument with the public, I can
guarantee you that it is not going to succeed in this Congress.
Mr. TORRICELLI. I don't think, Mr. Abercrombie, that anybody be-
lieves the Indian tribes do not want to keep organized crime off the
reservations. They have a greater incentive to keep them off the
reservations than any of us have. We understand that. I think it
is Mr. Trump's testimony that, given the use of force and intimida-
tion, it is very difficult that, even if known, but largely the problem
is that it is not known.
I spoke of the insidious ways that organized crime tried to work
its way into Atlantic City. It took an extraordinary effort to expose
it. I think it is our combined belief that that is just very hard to
do without the resources.
Finally, Mr. Abercrombie, I want to note to you that in what I
think is the only bill before the committee dealing generally with
the problem of corruption in Indian gaming, my legislation calls
completely for equity. I do not eliminate opportunities for Indians,
only put all citizens on the same basis with the same regulatory
responsibilities and rights, no special advantages, but certainly no
discrimination. I would not be a part of discrimination against any-
one, and I would invite you to review my legislation. I think you
will see it is fair from that perspective.
Mr. Abercrombie. As I indicated, in conclusion, Mr. Chairman
and Mr. Torricelli, I am paying close attention to your legislation
and will fully take it into account, I can assure you.
Mr. Torricelli. Thank you.
Mr. Richardson. The chair recognizes the Minority Member
from California, and I would ask that the gentleman from Hawaii
chair briefly.
Mr. Calvert. Thank you, Mr. Chairman.
Mr. Torricelli, as you know, I am from California. We are near
another gambling area that is even larger than Atlantic City, Las
Vegas. There are lots of people who would like to own a casino in
Southern California. I believe 50 cents out of every gambling dollar
that goes to Las Vegas, I have been told, come out of Southern
California or California. So there is a lot of pressure in California
to put Class 3 gaming. At the present time in California we only
have Class 1 and Class 2 gaming.
As I understand it, the National Indian Gaming Commission can
only regulate Class 2 gaming in California, yet in San Diego we
have reservations involved in what anyone would define as Class
3 gaming.
I also understand that no regulation of any kind is taking place
on the revenue that is being generated out of that Class 3 gaming.
The sourcing for the slot machines, the revenue that is generated
from those machine, it is not under the purview of the National In-
dian Gaming Commission to regulate Class 3 gaming because Class
3 gaming is not allowed in California. So we have a significant
problem.
In California also, near my district, in Palm Springs, the
Caliente Indians have entered into an agreement with Caesar's
239
would to build an 80,000-square-foot casino in downtown Palm
Springs. There are other major casino operators who are now ac-
tively looking around Southern California to get involved in casinos
in Southern California believing that they can get into Class 3
gaming.
I am hopeful, because I have talked to the district attorney, and
I know our chairman has, and to the governor of the State of Cali-
fornia, who is very concerned about Class 3 gaming coming to Cali-
fornia, and we want to stop that, and that is one of the reasons
that I am supportive of your legislation.
But do you have any comment on that? Why isn't the Federal
Government, the FBI, the Justice Department, stopping Class 3
gaming in California if, in fact, it is not allowed?
Mr. TORRICELLI. I think largely, Mr. Calvert, in defense of the
FBI, they haven't been given the mandate or even the authority.
It was never the intention of this Congress, in my judgment, it
certainly was not the intention of this Member, in an attempt in
the Indian Gaming Act to restore equity to Native Americans, to
allow them to have the special advantage of operated casinos out-
side the purview of the law, but indeed that is largely what has
happened.
This is something almost unique in American economic history.
We created an industry which now we must return to regulate,
rather than at its inception devising a regulatory scheme. Whether
or not we can do it, I do not know, but it is largely, I think, out
of control.
Mr. Calvert. The big guest problem in Csdifomia, I think, we
have 94-plus Federally-recognized tribes in the State of California,
more than any other State in the Nation by a wide, wide margin.
I have listened to the testimony on enforcement. If, in fact. Class
3 gaming to California, which some argue may happen, how are we
going to regulate Class 3 gaming in the State of California with 94
Federally-recognized tribes spread throughout the State of Califor-
nia from urban areas to rursd areas, with the limited manpower of
law enforcement that we have today?
We have a crime bill that is up; we are arguing over dollars to
fund that. How are we going to fund regulating 94 Federally-recog-
nized tribes? And, in fact, could that even occur?
Mr. TORRICELLI. Mr. Calvert, the fact is, you are not. The re-
sources would be so vast, the manpower so enormous, it probably
is not possible. I think that is part of the testimony that was pre-
viously given. In Atlantic City and Las Vegas, we had the advan-
tage of defined geographic areas and a limited number of partici-
pants.
We are now, today, discussing 125 Indian gaming establish-
ments. We could well in the next century have a thousand, based
on the number of tribes and the applications. The kind of control
we have seen in the past simply will not exist in the future.
Mr. Calvert. Thank you, Mr. Chairman.
Mr. Abercrombie [presiding]. Mr. Miller.
Mr. Miller. Thank you, Mr. Chairman.
In my 19 years on this committee, I don't know when I have
heard more irresponsible testimony than I just heard from this
panel. You have cast upon the Indian nations of this country a
240
blanket indictment that organized crime is rampant on their res-
ervations. You have suggested that the corollary to that is that
where there are compacts somehow State governments are party to
that without their knowledge, in spite of the FBI testimony that
this is not a significant problem.
Mr. Trump, in one sentence you say, "They are the most capable
of agencies," and that you are not a law enforcement expert, and
then you tell us that you have superior knowledge to their knowl-
edge about the extent of organized crime on Indian reservations.
I just find it incredible. This hearing is held for the purposes of
recognizing that Indian gaming does present an opportunity to or-
ganized crime, to members of the tribe who have larceny in their
heart, and to people who do business with them who want to take
advantage of them however, and everybody recognizes that.
So to come here and to suggest that you have some additional
knowledge of the extent of organized crime beyond what the FBI,
the IRS, the Treasury, and others have suggested, and then to sug-
gest the reason you have that is because you know this — ^you don't
know this; you suspect this perhaps, you don't know this, because
it is just — ^you know, it is just not there; it is just not there.
The list of cases that you hold up, a substantial portion, because
I can't tell because they come from newspaper reports, are previous
to this law when many of these activities were illegal in and of
themselves, they were being challenged in court — 1985, 1984, 1981.
You tell us that somebody had somebody run their gaming oper-
ation on the Barona Rancheria but he couldn't get a license from
the Nevada Gaming. We don't know why. We don't know why he
was disqualified in Nevada or whether that is grounds for disquali-
fication. It may be. I am not presenting the evidence, you are pre-
senting the evidence.
But you are suggesting that each an every one of these cases in-
dicate organized crime, that they indicate a lack of sophistication.
In fact, many of these cases were brought because the Indian tribes
themselves went to law enforcement agencies. They discovered they
were being duped, you know, and to equate them — to equate them
now with an industry in New Jersey or Nevada, you know, to the
tune of hundreds of millions of dollars in the month — what did you
take in September, $200 and some million in New Jersey? We are
all aware of this.
Mr. Trump, you are quite wrong. They have every right to go to
the FBI, the U.S. attorney, the Treasury Department. We have
Federal trust relationships which give them direct access.
Mr. Trump. They didn't in these cases, sir.
Mr. Miller. You don't know that.
Mr. Trump. Well, they are cases, they are convictions. You can
go and get the case number.
Mr. Miller. The Rincon case was brought by the tribe, one fac-
tion of the tribe that said, "We are being ripped off by another fac-
tion of the tribe, and they are trying to get organized crime in
here." They went.
Mr. Trump. We have got many cases. Sir, we have got many
cases in here. I don't think you have seen them.
Mr. Miller. I am sure you do. There are many cases in your in-
dustry where you didn't go, law enforcement came through the door
241
before you went through their door. But are we going to have a
blanket indictment of all casino owners? As a politician, you know,
I am kind of sensitive to the word "all,"
Mr. Trump. I certainly never said that, and I certainly don't ap-
preciate the fact that you are putting words in my mouth because
it is incorrect, and I have great respect for the Indians, and if I
were — and if I were running a reservation and was under the aus-
pices of this ridiculous Act that was passed, I would have the same
difficulty as the Indians keeping organized crime out, I, me. So that
is not a blanket
Mr. Miller. When you don't know — ^you don't know.
Mr. Trump. Excuse me, sir. That is not a blanket indictment of
anybody.
Mr. Miller. You don't know that they are having a difficulty.
Mr. Trump. Well, you can't know when you have no FBI agents
assigned to the Indian reservations, sir.
Mr. Miller, You don't have any FBI agents assigned to you.
Mr. Trump. Oh really? How many FBI agents are in Las Vegas
right now? How many FBI agents are assigned to Atlantic City?
Why didn't you ask that question?
Mr. Miller. Why are they there, Mr. Trump? They are there be-
cause they think there is organized crime,
Mr. Trump. They are there to stop crime. So why aren't they
there with respect to the Indian reservations?
Mr. Miller. Because they believe that your industry is attractive
to organized crime.
Mr. Trump. Look, you have got a totally closed mind on the sub-
ject, sir.
Mr. Miller, No, no, no, I don't, Mr, Trump.
Mr. Trump. We could walk in here with the greatest proof in the
history of the world, and frankly, your mind is so closed, for what-
ever reason, that I can't believe it.
Mr. Miller. But you don't have them? You don't have them?
Mr. Trump. If you really want to study this, when you tell me
that there are no FBI agents assigned to the Indian reservations
and yet you have tremendous numbers in Las Vegas and Atlantic
City — tremendous numbers, in fact, two of their largest places — I
want to tell you something, you have a long way to go, and, for
whatever reason, you have a closed mind, I don't know why. Per-
haps you could tell me.
Mr. Miller. No, Mr. Trump. I have a closed mind aga'nst evi-
dence that is not substantiated. I have a closed mind against state-
ments that are made about other people in generalities.
Mr. Trump. You are going to be very embarrassed in two years,
sir.
Mr. Miller. I have a closed mind if you go on a radio show and
you say, "Now some drunken Indians want to come down here an
open a reservation."
Mr. Trump. I didn't say that, sir. Quote it, I didn't say that. Who
said that? Who said that? I would like an apology right now, be-
cause I didn't say that,
Mr, Miller, Imus opened the broadcast — excuse me, Mr, Imus
said that,
Mr, Trump, Okay, Could I please have an apology?
242
Mr. Miller. You can have an apology.
Mr. Trump. Thank you, sir.
Mr. Miller. Is this you discussing Indian blood: "We are going
to judge people by whether they have Indian blood," whether they
are qualified to run a gaming casino or not?
Mr. Trump. That probably is me, absolutely, because I'll tell you
what, if you look — if you look at some of the reservations that you
have approved — you, sir, in your great wisdom, have approved — I
will tell you right now, they don't look like Indians to me, and they
don't look like Indians. Now maybe we say politically correct or not
politically correct. They don't look like Indians to me, and they
don't look like Indians to Indians, and a lot of people are laughing
at it, and you are telling how tough it is, how rough it is, to get
approved. Well, you go up to Connecticut, and you look. Now, they
don't look like Indians to me, sir.
Mr. Miller. Thank Grod that is not the test of whether or not
people have rights in this country or not, whether or not they pass
your look test.
Mr. Trump. Yes. It depends whether or not you are approving it,
sir.
Mr. Miller. No, no, it is not a question of whether I am approv-
ing it. It is not a question of whether I am approving it.
Mr. Trump, do you know in the history of this country where we
have heard this discussion before: "They don't look Jewish to me."
Mr. Trump. Oh really?
Mr. Miller. "They don't look Indian to me." "They don't look
Italian to me." And that was the test for whether people could go
into business or not go into business, whether they could get a
bank loan: You are too black; you are not black enough.
[Transcript of Imus broadcast follows:]
243
JtADlC
TVREPORTS
imifir-""""'"'^-'"^''-'^ C!;:;:r:r>t^i:
1KAM3CMPT mm rix&3S^3iS3
5T«»0H WPAN-AM
pftOOtAM jj^g jjj ,j.jjg MORHING °"' NBW YORK
OAlE 06/18/93 08:30AM ,„;o««
DONALD TRDMP
SUBJECT
BROADCAST EXCERPT
DON IMDS: It's 8:30 exactly here at WPAK in New
York, and here with us now, Donald Truc^. Good moraing, Donald.
DONALD TROHP: How you doing, Don?
IMUS: I'm fiaa. How are you?
TROMP: I'm very oood. ThanJca.
IMUS: So what is this now? A bunch of these
drunken Injuns want to open a casino down there in New Jersey?
TROMP: Well, it'3 a battle that we're fighting and
I think it'3 being suceeBsfully fought. A lot of the reservations
are being, in some people's opinion, at least to a certain extent
run by organized crime and organized crime elements, as you can
imagine. There's no protection. There's no' smythij^. And it's
become a joke. It's become a laughing joke. And the politicians
around 1987 passed a law where the Indians can have virt\jally
unsupervised casino gaming. So we're in there fitting it
and I think we're maOcing a lot of progress. I think you'll see
some very major things happenictg over the next couple of months.
IMOS: In yoMT mind, is there any legitimacy in them
being allowed to have casinos in states where there aren't now
casino, like say Connecticut?
TRXJMPs I think it'e up to chcstates. I mean, one
of Che things we did is bring a lawsuit and say it's scates'
rights. As an example. Governor Cuoao in New York didn't want to
have the Indians having casinos. The churches didn't want it. It
knocks out the bingo. It knocks out the charities, it knocks out
a lot of other things. So what they did ia they filed suits aid
they filed everything else. Oltiwately, the Governor of New York
was forced to pass this horrendous situation that's taking place ia
upstate New York. I think it's going to be r-Vi^nged and I think
244
- 2 -
it's going to be changed fairly quickly, Don,
I>fOS: So will Indians be allowed co open casinos
here in New York?
I think it's going to be unlikely within the
next year.
IMDS: Okay. This is just niy opinion, but I don't
think it makes sense to anybody to have Indians operate casinos in
New Jersey.
TRt3MP: General George Custer was against it also
and looked what happened to him.
IMUS: But in New Jersey -- obviously you have three
casinos -- you already have casinos.
TRDMP; Right, but the difference is I pay taxes.
The Indiems aren't paying any tajces. The Indians aren't putting
anything back into what's happening. The funny thing is Caomo was
forced to put -- and now ail of a sudden they send hire certified
letters, "We want bridges."
They call it the sovereign nation. They call it a nation/
this great sovereign nation, the Indian tribes. All of a sudden,
it's nations.
Before it wasn't a nation, before gajak?ling. Now it's this
greac sovereign nation. We protect, we do this, we do that, but
when it comes to gambling, it's a sovereign r^aticn.
So it's really a double standard and no taxes are paid. No
supervision's there, tremendous crime, and most of the Indiana
don't want it themselves. The leaders -- you know, all chiefs and
no Indians, and the leaders want it for the qbvious reason, but I
think it's something that's going to end or is certainly going to
be supervised very, very stringently.
IMOS: Would there be any reason, if push comes to
shove, for you to become a meinfaer of these tribes?
TRDMP; Hell, I think if we Ipst various things, I
'yculd perhaps become an Indian myself.
IMOS: Tou know, do one of thqse Robert Bly deals.
TRUMP: Well, I think I might h^ve more Indian blood
than a lot of the so-called Indiana that are trying to open up the
reservations.
I looked at one of them -- well, I won't go into the whole
245
- 3
story, but I can tell you, I said to him, fj thirJc I have more
Indian blood in me thsin you have in you." And he laughed at rae and
he sort of acknowledged that I was right, but it's a joke. It' a
really a joke.
INUS: A couple of these Indiams up in Concectioit
look, like Michael Jordan, frankly.
TRUWP: I think if you've eve¥ been up there, you
would truly say that these are not Indiana. One of thera was
telling me his name is Chief Running Water • Sitting Bull, and I
said, "That's a long nauie." He said, "Well, just call me Ricky
Sanders." So this is one of the Indians.
I'll tell you, they got duped in Washington and it's jixst one
of those thingc that we have to straighten out. It's the
neverending problem of --
IMOS: having to straightep things out.
TRtMP: One of the big things that I'm working on is
sports betting in New Jersey and we have a sian over there nained
Chuck Hytian who turns out to be a disaster for the people of New
Jersey because this would mean treroendoxis taj^es and tax revenues.
1 don't know what happened with the bookies or whoever. I don't
know who spoke to Hytian. I have no idea, buthe's single-hamdedly
-- he's a Speaker and he's got some power over there, at least now,
and he's single-handedly stopping sports betting, and everybody in
New Jersey wants it and it's disgraceful and it's a great
opportunity for Atlajitic City. It's a greaf opportunity for New
Jersey.
And the senior citizens and New Jersey will get tremendous tax
revenues from it. So for all of you folks that know Speaker Chuck
Hytiem, call him up and blast the hell out of hira.
IMTJS: Kell, our opposition on' sports betting is as
long as the players get to bet, they might as well let the fans,
you know?
TROMP: Well, the players bet;. That's abcolutftly
true. And I'm sure it'll probably increase the ratings of your
particular station quite a bit if they had sports betting in New
Jersey.
IMOS: It's not that I want tq be like Mike. It's
I want to bet like Mike.
TRUMP: Yeah, right. Maybe ypu don't want to bet
like Mike.
246
IM0S: Maybe I can win once in a while. What else
is new with you?
TRDMP: Nothing. Things are going great. We're
just in the process of doing eooe incredible things. Tniatp Plaza's
doing something great and the hotels in Atlantic City have done
record- setting business. The Taj Mahal, when they thought Trump
wae finishftd, "Trump is over. He's history," and everything, I was
opening up the Taj Mahal and they said it could never do the kind
of numbers projected, and it's doing substantially greater than
anything ever projected. So it's really become the success of
the industry.
IMUS: You sound like a Truap P.R. guy, but you
netted 14 million dollare or sowething last month.
TREMP: We made a grosa operating profit of 14
million dollars, which was twice what the projections were at their
highest, and they won 41 million dollars last month at the Taj
Mahal. And the other casinos are doing proportionately -- they're
much smaller, but proportionately equally as well.
IMtrSi what's the status with- your marriage? Are
you still getting married?
TRUMP: Oh, I ' m doing great . If s really fantastic.
IMUS: Yeah, but are you getting married?
TROMP: That might be the oost difficult question
you've asked me so far. See, the Indian problem is a much sic:5>ler
problem. That can be solved.
IMUS: Maybe you can have one of those traditional
tribal ceremonies.
TRDMP; That's right. Maybe that would be the best
way to do it. That way, it wouldn't be an authorized marriage.
Therefore, I could claim marriage without any of the liabilities,
right?
IMOS: That's what I was going to say.
TRUMP: "What are you tailkiag' about? I ne-.-wr got
Tcarried. '
about it . "
IMUS: "I gave her some beads a|id that was basically
TRUMP: "I can get s\ied for nine billion dollars, but
what do you mean? The marriage is forget it. I have a great
relationship.
247
IMtTS: It's a work, in progress.
TRUMP : Huh?
IMOS: It's a work in progress.
TRUMP: It's a work of art in progress.
IMOS: That's right, a work of arc in progress.
TROMP; That's exactly correct, how are you doing
on your social front? Vo you have a new beaut:iful girlfriend yet?
iMaS: Well, you toow, they come and they go.
TRT3MPr At least with you, I laaovr it's definitely a
girlfriend, okay?
IMUS: At this point, yeah.
TRDMP: With a lot Of people, we don't ]ctiow.
IMOS: Donald, always nice to talk with you. Good
luck and many moon coma CSaoctaw.
TRUMP: Thank you very much. Bye.
IMOS: It's 8:36, 24 till 9:00/ Imus in the Morning.
roTou p. 06
248
Torricelli gambling bill
a prize-winning insult
ith Father's Day almost
upon m, the judges are
taking nominations for
Father of the Year.
Benevolent Great Whit* Father
of the Year, that ia.
I euggest Rep. Robert
TorricellL
The Englewood Democrat on
Wednesday introduced a bill
aimed at (rlvirg elates more
power to limit gambling
operations run by American
Indian tribes. It was immediately
denounced by the head
of the National Indian
Gaming Association as
"economic racism."
But racism,
economic or otherwise,
by itself is not enough
to get you the
BGWFOTY Award. For
that, you must include
patronizing and
paternalistic
justifications. You have
to literally add insult to
injury.
And BO, beyond worrying about
competition for Atlantic City
and being concerned about
organized crime (non-benevolent
white fathers) using the tribal
casinos as money-laundering
fronU, Great White Father-
nominee Bob, end the Nevadans
sponsoring the Senate version of
the bill, are motivated by
concern for the Indian people
themselves.
"Casino gambling is the
cultural genocide of Native • '
Americans," Torricelli said in
announcing the bilL 'This. will •
destroy what remains of the
Native American culture."
On what authority does he say
this? I asked Torricelli on
Friday.
"We are repeating what we are
getting from Indiana themselves"
— Indians who work ir.
reservation schools and health-
care clinics — he responded.
The reser.ations were
established by the U.S.
government to preserve the , .
Indianfwaiy of ^ei Torricelli Said, V
not "to become islands of casino' '
gtmbUiig free of iaXE« or';"-j' ■ -:
government regulation 6t.l«w ■ ;
enforcement" . 'r;^^
"This isn't an answer for the
economic problems of the
Indians," he told me.
Does anytjne second the
nomination?
"It's the back-door approach
— you know, killing with
Chief Ronald "Red Bone" Van
Dunk. The chief is trying to
steer clear of the gambling
question as his tribe, whose
members live In North Jersey
and southern New York, pursues
its quest for federal recognition.
But he was so moved by the
congressman's concern for his
people and their culture that he
had tc rtspond.
"Ihe/re going to help the
poor Indians — by not
letting them do
anything to enhance
their livelihoods," the
chief said. "Like they
helped them out there
in Arizona, when they
found gold. Helped
them right off the
land."
"That is probably
one of the most
ridiculous things I've
ever heard," says Tim
Giago, an Oglala Sioux
who is publisher of Indian
Country Today, a national
newspaper baied in Rapid City,
S.D., near the Pine Rioge
reservation, where tribal
business, worship, and the like
are conducted in the native
language and where the culture is
holding its own despite centuries
of help from Greats White
Fathers.
"Just the opposite is true,"
Giago says. "Where does the
money from tribal casinos go? It
goes into scholarships for our
students, retirement funds for
OUT elderly people. It goes into
buying back the land, to support
the Indian colleges — which is
where the language and the
culture is tau^U"
0 make Indian- run gaming
subject to the control of
individual governors,
Giago says, is lik» "putting
the fox in charge of the
henhouse." '■.■9;i^;''. ■ '-^ ■■■•,■
t i'-"'' ■ •• ■, . ^
^. , Who's right about tribal .■■
I' casinos? Seems like that should
'. be up iOj the .tribal councils to
decide.
Anyway, back to the) '
nomination. TorricelK's
statement, Giago says, "is very
paternalistic."
■ Exactly what the BGWFOTY
iuHc^s (.re Wilcinc for.
sr
i
249
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5-c b
^ - = ^
1
C O * 5^
•- o
o;n 2^■9^•a -c js "
25
>
Z
u>
,u
250
Mr. Trump. I want to find out — well, then, why are you approv-
ing— ^you are approving for Indian. Why don't you approve it for ev-
erybody then, sir? If your case is nondiscriminatory, why don't you
approve for everybody? You are saying only Indians — wait a
minute, sir. You are sajdng only Indians can have the reservations,
only Indians can have the gaming. So why aren't you approving it
for everybody? Why are you being discriminatory? Why is it that
the Indians don't pay tax but everybody else does? I do. Why is it
that I pay tax? Why is it that senior citizens get tremendous bene-
fits from the taxes that a certain industry does but the Indians
aren't contributing to that? Why aren't the Indians — excuse me, sir.
Why aren't the Indians that are making all the money in Connecti-
cut, which is the most successful of the Indian reservations — why
aren't they spreading the wealth with the other Indians, sir? Why
don't you do something for the other Indians that are living in total
poverty? Because — ^you know why? Because their reservation is too
far away
Mr. Abercrombie. Mr, Trump, if you will give the chairman a
chance to 2inswer your questions, I am sure he will.
Mr. Trump. I am sure he will, absolutely.
Mr. Abercrombie. Well, don't ask the questions if you don't
want an answer.
Mr. Trump. I think I know the answer from him.
Mr. Miller. Well, no, no. Let's go through it.
Mr. Trump. Why don't they spread the wealth? That is the ques-
tion.
Mr. Miller. Mr. Trump
Mr. Trump. Why don't they spread the wealth?
Mr. Miller. Mr. Trump — ^Mr. Trump, it is my time.
Mr. Abercrombie. Mr. Trump, the chairman has the time now.
Mr. Miller. Mr. Trump, why don't the Indians spread the
wealth to the other Indian nations that don't have gambling when
they don't have a responsibility to? You cite that one of the great
benefits is that New Jersey senior citizens can get prescription
drugs at $5. What about the Pennsylvania senior citizens that
leave their money in New Jersey? What about the Washington,
D.C., senior citizens that leave their money in New Jersey, the peo-
ple from New York and Connecticut, the people you are there to
attract? What about all of our constituents from California that go
to Nevada and leave their money there? Why don't they get $5 pre-
scriptions?
Because you don't have a legal obligation to do so. You did so be-
cause you wanted gaming to come to New Jersey. This was a nego-
tiated agreement. The Connecticut agreement is a negotiated
agreement between the State of Connecticut and the tribe in Con-
necticut.
Mr. Trump. Hardly negotiated, sir. It was really forced down peo-
ple's throats, wouldn't you say?
Mr. Miller. Okay, now, let's
Mr. Trump. Do you think Governor Weicker — do you think Gov-
ernor Weicker — do you think Governor Weicker considers that a
negotiated agreement, sir?
251
Mr. Abercrombie. Mr. Trump, let
Mr, Trump. Wasn't that forced down his throat?
Mr. Abercrombie. Mr. Trump
Mr. Miller. Mr. Trump
Mr. Abercrombie. Mr. Chairman and Mr, Trump, you asked a
series of questions. The chairman is going to give you the answers.
If you would kindly let him complete the answer, then you can go
on. After this colloquy, then I am going to move ahead. We have
other panels here,
Mr, Miller, You asked the other question, why did the Indians
get the reservations?
Mr, Trump, I didn't ask that question.
Mr, Miller, Well, you said why do we discriminate?
Mr. Trump, No. I said — I didn't ask that question.
Mr, Miller, Okay, You ask the question again.
Mr, Trump. Do you want me to ask another question?
Mr. Miller. No. Ask that question you asked.
Mr. Trump. I said to you, you have a group of Indians, I think,
that has a reservation in Connecticut that is making, I believe, per-
haps in excess of $500 million. There are a total of 400 people or
300 people, or a very small amount of people in that particular
tribe. To make $500 million for 300 people, I ask you — and this is
a Federal pact, this is done with the auspices of your office and al-
lowed through the auspices of your office — ^why isn't that wealth,
if you are so concerned, sir, about the Indians, which I think you
should be, and I think it is a great concern — if you are so concerned
with the impact and the welfare of the Indians, why do you allow
300 people to make $500 million? Why don't you say that that
money has to be distributed around so that other people can be
helped, so that medical care in other locations in the United States,
where you have Indians that are truly living in poverty, so that
they can be taken care of? How can you allow this to happen?
And what we are really doing, and getting off the subject — ^you
know and I know that this is going to blow.
Mr, Miller. No, Mr. Trump, I don't know that.
Mr. Trump. Oh, you don't know it?
Mr. Miller. No.
Mr, Trump, Well, I'll tell you what, I'll see you in about two
years, and we will see who is right, sir.
Mr. Miller. Well, let's go down that— just for a second, Mr.
Chairman.
Mr. Calvert said — what did you say, Caesar's, is looking for a
management agreement? You have tried to get a management
agreement
Mr. Trump. I have not.
Mr. Miller. You have not?
Mr, Trump. I have not.
Mr. Miller. Your corporation hasn't-
Mr. Trump. I have not, sir. That will be your second apology, I
hope. I have not tried.
Mr, Miller. Well, I have a letter here from Mr. Bunce who talks
about your various contacts regarding the possibility of your in-
volvement in a venture, the Agua Caliente, and I will
] 252
('
Mr. Trump. Mr. Who?
Mr. Miller. Mr. Bunce, in his capacity as legal counsel. I will
enter this into record.
[The information follows:] ^
253
AFFIDAVIT
STATE OF CALIFORNIA )
)
COUNTY OF RIVERSIDE )
Richard M. Milanovich, being first duly sworn on his oath,
deposes and states as follows:
1. I eiin now, and at all relevant times mentioned herein have
been, the duly-elected and serving Chairman of the Tribal council
of the Agua Caliente Band of Cahuilla Indians (hereinafter, the
"Tribe"). The Tribe is a federally-recognized Indian tribe whose
federal Indian reservation is located in and around Palm Springs in
Riverside County, California.
2. This Tribe has not yet offered or engaged in any form of
gaming (other than Class I traditional gaming) . The membership of
the Tribe voted in January of 1992 to direct the Tribal Council to
enact an ordinance for the conduct of Class II and Class III gaming
for the benefit of all Tribal Members. The Tribal Council
solicited proposal for this purpose in mid-1992, screened them,
interviewed prospective operators, and selected a subsidiaxry of
Caesars World, Inc. for this purpose in August of 1992. After
considerable negotiation, the Tribe entered into a management
agreement with this subsidiary in July of 1993, and has submitted
it to the National Indian Gaming Commission in August of 1993,
along with a gaming ordinance, for its approval.
3. Prior to early February of 1993, I had had no dealings or
contact of any kind with Donald Trump or his organization.
4. In early February of 199 3, I received one or more
telephone calls from Mr. Donald TrUmp at the Tribal Office. I have
84-760 O - 94 - 9
254
no record of them because I was in and took the call, rather than •^.rv\-'«
receiving a written message. Mr. Trump told me that he was^in town
for the Bob Hope Desert Classic Golf Tournament, and that he wanted
to stop by the Tribal Office to see me. I agreed to such a
meeting .
5. Mr. Trump appeared at the Tribal Office at about 5:00 p.m.
on a day which I believe was probably February 11 or 12, 1993. He
met with me, then Vice-Chairman Mildred Browne, and then Secretary
Ray L. Patencio. The meeting lasted 30-45 minutes.
6. At this meeting, Mr. Trump stated to us that he was well
aware of this Tribe's previous announcement that it was negotiating
a management agreement with Caesars World, Inc. for a tribal gaming
facility to be located on the Agua Caliente Indian Reseirvation in
or near Palm Springs, California. He asked if any final agreement
had been reached because, if none had been reached, then he would
like to discuss the possibility of such a venture between the Agua
Caliente Band and his organization. He described his and his
organization's experience in gaming, and told us how his political
and other connections could cut through bureaucratic red tape to
gain the necessary approvals quickly for such a venture.
7. Our answer to him was essentially thanks, but no thanks.
We explained that, although no such final agreement between the
Agua Caliente Band and Caesars World, Inc. had been reached, such
an agreement was currently being negotiated. As long as we vrere
bargaining with Caesars World, Inc. we felt we were obligated to
see that process through, rather than considering any other
operator, although we might be willing to discuss such a
255
relationship with others if and when negotiations with Caesars
World, Inc. fell through.
8. Mr. Trump's response was cordial. He said he understood
our position and asked us to keep him in mind if our dealings with
Caesars World, Inc. reached an impasse. We told him that we would.
He then left.
9. On February 22, 1993, at 3:40 p.m., at the Tribal Office,
Mr. Trump called me. I was not in at the time. My secretary took
a telephone message, asking me to return Mr. Trump's call at 212-
308-7868 or 212-832-2000, and to ask for Rona. A copy of this
telephone message is attached as Exhibit A.
10. During March of 1993 there was at least one other
telephone conversation to me at my home in Palm Springs from Mr.
Trump in New York, but I cannot locate any confirming documentation
regarding it at this time.
11. On March 25, 1993, at 11:12 a.m., Mr. Scott Kasen,
Director of Special Projects for the Trump Organization, called me
at the Tribal Office. I was not in, but my secretary took a
message to the effect that Mr. Trump had asked him to call me. A
copy of this telephone message is attached as Exhibit B.
12. As an apparent follow-up to this call, Mr. Kasen wrote a
letter to Tribal Secretary Ray L. Patencio, dated March 26, 1993.
It arrived on March 29, 1993 by DHL Courier Service. Copies of the
letter and the shipping label are attached as Exhibits C and D.
The point of this letter was, as it states in its third paragraph:
It is no secret as to why I telephoned. I
called you to express Mr. Trump's interest in
working with the Agua Caliente Band of Cahuilla
Indians to construct and operate a first class
casino on the tribe's reservation.
256
13. I returned this call by calling Mr. Kasen at 212-832-2000
at 1:59 p.m. on March 30, 1993. A copy of the Tribe's telephone
bill for this call is attached as Exhibit E. The call was short,
because I just repeated our previous position.
14. Mr. Kasen followed up this call by a letter to me, dated
March 31, 1993. A copy of it is attached as Exhibit F. In it, Mr.
Kasen repeats the desire of the Trump Organization to discuss a
gaming project on the Agua Caliente Indian Reservation if our
negotiations with Caesars World, Inc. fail. He also asked for the
names of other tribes that might be interested in such a venture.
We did not reply to this letter.
15. On April 8, 1993 Mr. Kasen sent a message to me by FAX.
A copy of it is attached as Exhibit G. The message was, "Please
call me when the negotiations stall."
16. On April 21, 1993, at 3sl5 p.m., I received another call
from Mr. Kasen. I was not in, but my secretary took a message to
"Call next week." A copy of this telephone message is attached as
Exhibit H. That was the last contact that I had with Mr. Trump or
his representatives .
Richard M. Milanovich, Chairman
Subscribed and sworn before me on October [^ , 1993 at
, California.
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signature(s) on the instrument the person(s),
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WitNESS my hand apif offidal seal.
THIS CERTIFICATE MUST BE ATTACHED TO
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Though the data requested here is not required by law
It could prevent fraudulent reattachment of this form.
Though statute does not require the Notary to
till In the data below, doing so may prove
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□ INDIVIDUAL
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NUMBER OF PAGES
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26 March 1993
Mr. Ray Leonard Patencio
Agua Caliente Band of Cahuilla Indians
960 East Tahquitz Canyon Way, #106
Palm Springs, California 92262
Dear Ray:
Mr. Trump asked me to telephone you and introduce myself.
I am sorry that we did not have a chance to talk, however, I
understand you desire to avoid any potential conflicts of interest
since you are no longer on the Tribal Council.
It is no secret as to why I telephoned. I called you to
express Mr. Trump's interest in working with the Agua Caliente Band
of Cahuilla Indians to construct and operate a first class casino
on the tribe's reservation.
The Trump Organization is the largest company in the gaming
industry, and we are the only hotel and casino operator to achieve
a four-star property rating. Not only are we the only company to
achieve a four-star rating, we were able to achieve this rating at
each one of our three hotel and casino properties.
I would like to invite you, Richard Milanovich and Mildred
Browne to New York and Atlantic City so that you can experience
first-hand why Mr. Trump and The Trump Organization possess the
skills, experience and resources necessary to make the Agua
Caliente's casino the West Coast's finest.
I will call you to make the appropriate arrangements for your
visit.
Kasen
Directof of Special
Projects
THE TRUMP ORGANIZATION
<VVENUE NEW YORK N Y 10022 212-832-2000 TELEX -427715
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263
March 31. 1993
Mr. Richard M. Mllanovlch
Chairman
Tribal Council
Agua Caliente Band of Cahuilla Indians
960 Last Tahquiu Canyon Way, # 1 06
Paim Springs, CA 92262
Dear Richard,
Thanl( you for returning my phone cail.
1 was disappointed to learn that we can not fomially begin discussions until your negotiations
with Caesars have concluded. However, while I do not enjoy playing the role of Brutus, if
negotiations with Caesars should not progress as planned, please call me immediately so we
can begin our dialogue. The faster that we can start worldng together, the sooner the casino
will be up and running.
Also, I would like to learn more about those tribes that you mentioned which are interested
in seeking partners for casino development. I look forward to hearing from you soon - please
keep in touch.
^asen
Director of Special Projects
THE TRUMP ORGANIZATION
785 FIFTH AVENUE • NEW YORK. N. Y. 10022 212 832 • 20O0 TELEX • 427715
264
flPR-0e-1993 148 53 FROM TRUtF TOWER 26
16193250593 P. 001
OMUUIOUDlOll
728 FIFTH AVENUE
NEW TOTK.N.Y. 10023
(212)833-3929
FACSIMILE TRAMSHISBION
April 8. 199 3
DATE:
NUr4BER OF PAGBS
(INCLUDING COVER)
8cott Kasen
FROM:
212-935-0141
FACSIMILE NUMBER:
If you did not reoelve oloar copies
at (212) 832-2000
MESSAGE :
Dear RlchTd,
Mr. Richard Kjlanovic
SENT TO:
619-325-0393
FACSIMILE NUMBER:
}f all pages contact sencer
A quick fax to aajr hello. 'lease call ma when cha
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intended recipient, you are hereby notified that any unauthoi i^ed
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reliance on the contents of the telecopied materials is
prohibited. Materials transralttgt!. which is protected by
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WAS IN (_'j URGENT [_]
266
Mr. Trump. Legal counsel of who?
Mr. Miller. The Agua Calientes.
Mr. Trump. Oh, you mean somebody wrote to me asking for —
that is not my people writing, sir.
Mr. Miller. No. He says, "I am writing at your request."
Mr. Trump. At my request?
Mr. Miller [continuing]. "Concerning your various contacts re-
garding the possibility of your involvement"
Mr. Trump. Sir, that is somebody writing a letter to me, I am
not writing a letter to them. I don't blame them for wanting
Mr. Miller. Caesar's has asked? Is that your information? Oth-
ers in your industry are seeking management contracts with var-
ious Indian gaming operations either existing or in future. Is that
correct?
Mr. Trump. That is true. I think that is true, yes.
Mr. Miller. So what is the conclusion to be drawn from that?
That they, too, will have no ability
Mr. Trump. No, the conclusion is, hey, this thing is running
rampant, they are running public companies for the most part,
they might as well get on the ship. But they know, and if they were
down here testifying, they know that when you have this many en-
tities, this many — they know, they are professionals — that you can-
not control the mob, you cannot control the organized crime, you
are not going to do it.
Willy Sutton
Mr. Miller. So they are making this decision
Mr. Trump. Willy Sutton — excuse me, sir — ^Willy Sutton said he
robbed banks, he said that is where the money is. Well, the mob
is going into the casinos, and what they are doing is, they are going
into the Indian casinos because, sir, that is where the money is,
but also that is where the lack of enforcement is.
Mr. Miller. Why is your industry-
Mr. Trump. Sir, that is where the lack of enforcement is.
Mr. Miller. Why are members of your industry going there
when obviously
Mr. Trump. Because they want to make money.
Mr. Miller. Wait a minute. If they were to be involved with or-
ganized crime or any kind of criminal activity, it would, I assume,
under both Nevada's law and New Jersey's, would reflect on your
ability to continue to hold a license, would it not?
Mr. Trump. Because they want to make money, sir, because they
really want to make money, and I have — ^you know, I have a great
love for this country. I happen to be
Mr. Miller. It is quite possible for a reservation to enter into a
gaming contract, management contract, with somebody in your in-
dustry— I don't know about other people on the outside, these com-
panies that are being formed — ^but in terms of your industry, to
enter in with the Mirage or with Caesar's or former executives of
those people who have their own private operations. An Indian
tribe could enter into that and have a great bulwark against orga-
nized crime because that operator would have to say, "I cannot do
business with you people, I cannot let this go on, because my li-
cense is at risk."
267
Mr. Trump. I didn't say the companies are honest. I said the reg-
ulatory process is honest. The regulatory process is a huge and
cumbersome thing that, in the end
Mr. Miller. But there clearly is a way — there clearly is a
way
Mr. Trump. Do you want me to answer the question?
Mr. Miller. There clearly is way for those casinos to do business
outside of organized crime because they are doing business with
people who have a great stake
Mr. Trump. The regulatory
Mr. Miller. Is that not true?
Mr. Trump. The regulatory process-
Mr. Miller. I understand the regulatory process.
Mr. Trump. The regulatory process, in a limited number of loca-
tions, can keep casino gaming honest. When you open up hundreds
of locations randomly without even State control — I am not saying
State or anything, but without any control — ^there is no way to keep
that honest, whether I run it, whether Caesar's runs, whether the
Indians are running it. There is no way. You have too many places,
you have too much money involved. The mob is going to take over
it. It is starting to come out. It will start coming out a lot more,
and in two years, sir, you are going to be a very embarrassed man.
Mr. Abercrombie. Mr. Trump and Mr. Miller — Mr. Miller you
will have the concluding remark.
Mr. Miller. Let's just understand one thing.
Mr. Trump. Thank you, sir.
Mr. Abercrombie. Speaking of running things, I am running the
committee. So Mr. Miller will conclude in as much as he is the
chairman.
Mr. Miller. You want to keep suggesting that somehow there is
no regulatory scheme for these reservation gaming sites. The fact
is, there is in almost every instance. Obviously, where you have
compacts the governors are concerned about their citizens as you
are, and we now have, I don't know, what, 26 governors that have
entered into compacts with various tribes.
Mr. Trump. They have had no choice, sir.
Mr. Miller. You have the whole regulatory scheme of the Gam-
ing Commission. Most of the cases you cite were before the Gaming
Commission. They have the memorandum of understanding with
the FBI. The tribes have under the trust relationship a direct ac-
cess to the FBI, to the Treasury Department, to the Attorney Gen-
eral of the United States,
You keep wanting to paint this picture as somehow these people
are off just willy-nilly doing business. The fact is, that isn't. Many
of the contracts that were cited in the evidence you presented — to
date, when they were signed they weren't under the scrutiny. The
Secretary didn't have to approve them. Today the Secretary does.
The arrangement in New Jersey, as I think you pointed out, isn't
allowed, the potential arrangement isn't allowed under the existing
law, as Senator Inouye testified. I appreciate the theory, but it isn't
allowed under the existing law.
The fact is, if they entered into a management agreement, that
management agreement would have to be signed off by this Sec-
retary of the Interior. So the suggestion you have painted is that
268
somehow these people are doing — you used the term "deregulated"
or "unregulated," completely outside the scheme of regulation, com-
mensurate with this industry, and the fact is, they are not.
Mr. Trump. Sir, I will just give you a quick answer, and then the
Congressman will give you a much more appropriate answer to
something else. I will tell you that, you asked me about governors,
and you said the governors are routinely signed. The governors are
being forced
Mr. Miller. These are hard bargainers.
Mr. Trump. Sir, they are not hard bargaining, because if Mario
Cuomo didn't sign his pact in Syracuse, the Indians were going to
court, and they would have won on summary judgment based on
the ridiculous law that was passed, okay? So it is not hard bargain-
ing. He sat there and he had absolutely no choice.
Lowell Weicker, who I have great respect for, fought and fought
and fought and ultimately was bludgeoned into having to accept
this, and he is not happy about it, and Connecticut is not happy
about it, and Connecticut is a total disaster over Indian gaming.
Mr. Abercrombie. Thank you, Mr. Trump.
Mr. Trump. They have created a monster.
Mr. Abercrombie. Thank you, Mr. Trump.
Mr. Torricelli, in as much as you are also a part of the panel,
we will conclude this panel with your remarks.
Mr. Torricelli. Thank you.
Hesitant though I am to engage in this conversation
Mr. Abercrombie. And then we will move on to our next exciting
panel.
Mr. Torricelli. Allow me just to conclude for a moment simply
with this. There is much that is not known on the problems of In-
dian gaming. The intention here today was to reflect simply on a
few things that we do know.
The inspector general has concluded that there is fraud and
abuse that is costing Indian tribes millions of dollars. We have at-
tempted to establish that there are not sufficient Federal resources,
indeed an absence of FBI and IRS presence, to deal with the prob-
lem of money laundering and the presence of organized crime.
We cannot, we could never, come before you, Mr. Chairman, to
the degree that you would like with evidence to establish this fact.
That was not our intention. It was not our intention to prove every-
thing that has taken place, simply the absence of what we know.
But in all fairness, I think we are approaching this in a reverse
fashion. To cite that Caesar's or other legitimate institutions have
management contracts or will be involved in the industry hardly is
the way to approach the problem. It is not enough that there are
some legitimate people in the industry, the problem is that there
are illegitimate people in the industry. We can't be satisfied be-
cause there are a few good participants, even that most are good
participants. The fact that some are not, I think that is how the
issue should be approached.
The legislation I have submitted to this committee for its review
is simply this. That the negotiating process is not working.
Yes, Mr. Miller, if there were compacts in all States legitimately
and honestly agreed to on an equal basis, we would not have a
269
problem. Forty of these casinos are operating with no compacts, no
State agreements whatsoever.
As has been testified, many of them, as in the States of New
York and Connecticut, were against the wishes of the States be-
cause they were going to be compelled by Federal courts.
I have submitted legislation that is simple on its face. I do not
believe any industry in this country should be the reserve of any
group. I know one person who has come here today testifjdng
against any discrimination, me. Any citizen of this country that
wants to operate casino gaming should be able to do so on an equal
basis, same law, same taxes, same investigations, same regula-
tions, period, no distinctions. You make the grade, or you do not.
That is the legislation that I have given you, that it be regulated
and done fairly with revenues returned. That is the suggestion I
give to you. I hope we have made a contribution. We have tried to
do so. I leave it to you for your review.
Mr. Abercrombie. Thank you very much, Mr. Torricelli.
Thank you very much, Mr. Trump.
Mr. Trump. Thank you, sir.
PANEL CONSISTING OF HON. ADA E. DEER, ASSISTANT SEC-
RETARY OF INDIAN AFFAIRS, BUREAU OF INDIAN AFFAIRS,
U.S. DEPARTMENT OF THE INTERIOR, ACCOMPANIED BY
HILDA A. MANUEL, DIRECTOR, INDIAN GAMING MANAGE-
MENT STAFF, AND THEODORE R. QUASULA, CHIEF, DIVISION
OF LAW ENFORCEMENT; HON. ANTHONY J. HOPE, CHAIR-
MAN, NATIONAL INDIAN GAMING COMMISSION; HON. JOEL
FRANK, COMMISSIONER, NATIONAL INDIAN GAMING COM-
MISSION; AND MICHAEL D. COX, GENERAL COUNSEL, NA-
TIONAL INDIAN GAMING COMMISSION, ACCOMPANIED BY
HON. JANA McKEAG, COMMISSIONER
Mr. Abercrombie. Now we will move on to our third panel, and
I think that some of the questions that have been raised during the
first two panels can be addressed and probably will be addressed
both in the testimony and subsequent discussion: The Honorable
Ada Deer, assistant secretary for Indian affairs in the Bureau of
Indian Affairs of the Department of the Interior. The assistant sec-
retary will be accompanied by the director for the Indian gaming
management staff, the chief of the Division of Law Enforcement for
the Indian gaming management staff; the chairman and commis-
sioners of the National Indian Gaming Commission, as well as
their general counsel, Mr. Cox.
I trust that at least some of the media will remain to get some
of the answers that could be forthcoming as opposed to some of the
celebrity "Family Feud" activity that they seem more interested in.
Secretary Deer, I commend you for your patience. I notice that
you were more than anxious on several occasions to want to re-
spond, and those accompanying you, I think, were anxious to do so
as well. So I won't hold up that opportunity any longer, and I
would ask you to go ahead with your testimony. The full sum of
it, of course, is in the record. You can summarize if you wish, and
then we will move on to questions and/or commentary from you
and those accompanying you, and if during the course of your testi-
270
mony you would like to defer momentarily to anyone accompanying
you, feel free to do so, and I forgot to say Aloha and welcome.
STATEMENT OF HON. ADA E. DEER
Ms. Deer. Thank you very much, Mr, Chairman and Members
of the Committee. I am delighted to be here and to offer testimony
on the implementation of the Indian Gaming Regulatory Act, with
special emphasis on law enforcement issues.
I have two members of my staff with me today who can answer
specific questions on technical or program issues if necessary. We
have Ms. Hilda Manuel, Director of the Indian Gaming Manage-
ment staff, and Mr. Ted Quasula, Chief of the Division of Law En-
forcement.
I would like to present a summary of my statement and to re-
quest that the full text of my prepared statement be made a part
of the record. I am very conscious of the time, and I want to note
that.
Mr. Abercrombie. It will be.
Ms. Deer. As many of you know, I have devoted my life to being
an advocate for change, change that provides for accountability. My
efforts in holding the U.S. Government accountable for terminating
the Menominee Tribe of Wisconsin are a prime example.
Today, my concern lies with ensuring that Indian gaming oper-
ations are successful and that these operations comply with the let-
ter and spirit of the Indian Gaming Regulatory Act.
As a social worker, I measure the success of gaming in very basic
terms. Does it provide housing, education, and employment oppor-
tunities for tribal members? The answer is a resounding yes. As a
matter of policy, the Department supports Indian gaming and is
committed to the goals and objectives of the Indian Gaming Regu-
latory Act.
We have all heard about the successes of Indian gaming on In-
dian lands. There is no doubt, Indian gaming has become a major
economic development activity for Indian tribes. Many Indian
tribes now provide better governmental services, better health care,
higher quality educational benefits, employment, and have a source
of capital for other economic development investments.
In States such as Minnesota, Wisconsin, and Michigan, poverty,
alcoholism, unemployment, juvenile delinquency, and other social
problems have been significantly reduced and positively addressed
by the economic benefits brought by gaming to the tribes. Regret-
tably, tribal efforts to better not only the economic conditions of
their own communities but also that of neighboring communities
have been met with contentious debate and opposition.
A focal point of this ongoing debate is a perception by Indian
gaming opponents that Indian tribes have been provided an unfair
advantage over other citizens. Congress intended to allow Indian
tribes a comparative edge because of the economic reality on Indian
reservations. Congress correctly perceived that this is the result of
centuries of advantage that have been granted to non-Indian com-
munities and continues, in many respects, today. This reality is
characterized by few natural resources, limited finances, lack of a
tax base, shortage of business capital and equity, underdeveloped
infrastructures, geographic remoteness from sizable markets, inad-
271
equate roads and transportation systems, and a lack of trained,
educated, or skilled workforces.
But Indian nations and peoples have survived these and other
disadvantages because of our innate intelligence, courage, pride
and tenacity. We are continually searching for a means to engender
self-reliance that are compatible with our cultures, values, and the
environment.
Concerns about the integrity of Indian gaming, its scope and
scale, the need for acceptable licensing and law enforcement capa-
bilities to keep out criminal elements have dominated the agendas
of national meetings, conferences at all levels of Federal, State, and
Tribal Governments.
The Department does not discount the potential for law enforce-
ment problems, especially in an industry with large cash trans-
actions. We have no reason to believe that Indian gaming oper-
ations are any more susceptible than any other gaming operation,
nor do we think that Indian gaming is in any way immune from
such criminal elements.
The Department believes that, on the average, the regulatory
and enforcement efforts of all parties. Federal, State, local, and
tribal law enforcement agencies, have done a commendable job to
keep Indian gaming free of law enforcement problems. We also be-
lieve that Indian tribes themselves have undertaken notable efforts
to ensure that Indian gaming activities are clean, honest, and free
of criminal elements.
Tribal gaming enterprises have installed sophisticated video sur-
veillance systems in their establishments which match or exceed
those found in non-Indian gaming establishments. Videotapes of
criminal activity gathered by these systems is used as evidence in
the prosecution of suspects.
Many gaming operations employ off-duty police officers who, be-
cause of their certification, can take immediate action when con-
fronted with criminal activity. Cooperative and ongoing coordina-
tion among all law enforcement agencies has become the mainstay
in ferreting out criminal elements.
In closing, I want to say that while we cannot guarantee that In-
dian gaming is free of criminal influences or that nothing will go
wrong, we do believe that there is sufficient law enforcement pres-
ence and oversight to discourage and deter criminal elements.
Indian nations and peoples have survived these and other dis-
advantages because of our intelligence, courage, pride, and tenac-
ity. We are continually searching for means of self-reliance that are
compatible with our culture, our values, and our environment.
This concludes my summary, and I will be happy to answer fur-
ther questions.
[Prepared statement of Ms. Deer follows:!
272
STATEMENT OF ADA E. DEER, ASSISTANT SECRETARY - INDIAN
AFFAIRS, DEPARTMENT OF THE INTERIOR, BEFORE THE SUBCOMMITTEE
ON NATIVE AMERICAN AFFAIRS OF THE COMMITTEE ON NATURAL
RESOURCES, U.S. HOUSE OF REPRESENTATIVES, ON THE OVERSIGHT
HEARING ON THE IMPLEMENTATION OF THE INDIAN GAMING
REGULATORY ACT WITH REGARD TO LAW ENFORCEMENT ISSUES.
October 5, 1993
Good morning Mr. Chairmem emd members of the Committee, I eun
pleased to present the views of the Department of the
Interior on the implementation of the Indiem Geuning
Regulatory Act (IGRA), with particular emphasis on law
enforcement issues. This hearing on Indian Gaming is timely
in view of the current effort by state emd tribal
representatives to reach consensus on possible eunendments to
the IGRA.
I will begin with some general remarks on Indieui gaming as
an economic development activity, followed by specific
remarks on law enforcement issues.
As we all know, geuning on Indian lands has become a major
economic development activity for Indiem tribes, eind we eure
witnessing em iinprecedented growth in Indicui gambling
operations. However, this growth has not been without
controversy emd criticism. Concerns about the integrity of
Indian geuning, its scope and scale, the need for accepteUale
licensing, emd law enforcement capedsilities to keep out
criminal elements have dominated the agendas of meetings
and conferences at all levels of Federal, state emd tribal
governments. Voices from all sides have offered their
opinions on the pros and cons of Indiem geuning. As a matter
of Federal policy, we support Indiem geuning emd are
committed to the goals emd objectives of IGRA.
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273
The principal goals of the IGRA are to promote tribal
economic development, self-sufficiency amd strong tribal
governments. A majority of the gaming tribes will tell you
unequivocally that Indiein gaming has greatly enhemced their
economic sufficiency. These tribes now provide better
governmental services, better health care, higher quality
education benefits, and employment and housing for tribal
members. They also have a source of capital for other
economic development investments. Geuning revenues have
provided a reliable source of fvmds to support tribal
government operations emd, in several instances, tribes have
also made contributions to local governments for roads,
schools, police protection cind social service progreuns to
help mitigate the impacts expected from Indiem gaming.
Indian nations emd peoples have survived memy disadvantages
because of our innate intelligence, courage, pride, and
tenacity. We are continually searching for meems of self-
reliance that are compatible with our cultures, values, and
our environment. The economic benefits brought by gaming to
the tribes have significantly reduced and positively
addressed, poverty, alcoholism, unemployment, juvenile
delinquency and other social problems.
Some of these tribal efforts to better not only the economic
conditions of their own communities but also that of
neighboring communities, have been met with contentious
debate and opposition.
A focal point of this ongoing debate is a perception by
Indian gaming opponents that Indicin tribes have been
provided an unfair advantage over other citizens.
-2-
274
Congress intended, however, to allow Indian tribes a
comparative edge because of the economic reality on Indian
resezrvations .
Indiem tribes are governments and as governments, they need
to provide essential services to their constituencies. Like
any government, they need revenue. Thirty-five of the 50
state governments have chosen to operate lotteries for
public finamce. Like states that operate lotteries, Indian
tribes operate gaming enterprises for public or governmental
finamce, not for private business profit.
The success of Indian gaming has, however, been subject to
specific limitations and requirements. Of all the gaming in
this Country, only Indian gaming is subject to Federal
regulation amd oversight. Only Indiam tribes are mandated
by Federal law to dedicate gaming revenues to statutorily
defined uses and purposes. If an Indian tribe wcints to
share gaming revenues with tribal members by making per
capita payments, the tribe is required to prepare a Revenue
Allocation Plan indicating how all the geuning revenues will
be used and must include the per capita distribution plan.
This Plan cemnot be implemented until it is approved by the
Secretary of the Interior.
Indian tribes are striving to be better neighbors than their
neighbors have been to them. Although not memdated, Indian
tribes are mindful of the potential negative effects that
gambling may have on society and, in memy cases, undeninrite
a large share, if not all, of the costs for reducing or
alleviating such negative social effects eind impacts of
gaming. Meiny Indian tribes contribute to local charities
and help fund local education projects ernd government
agencies whose services extend across the spectrum of
275
community need. And for the first time in history, Indian
gaming has proven to be a win-win situation. Mamy Indiem
tribes now stand poised to achieve economic self-
sufficiency.
Unfortunately, the right of Indiein tribes to geune is
expected to be revisited by Congress as a result of the
continuing conflicts between some tribes emd some states
over the scope of gaming and related regulatory emd
operational issues. Highly publicized claims by Indian
gaming opponents that tribal gaming operations are
unregulated and highly susceptible to infiltration by
criminal elements have also contributed to the decision to
reopen the IGRA for amendments.
The Department is keenly aware that the geuning industry with
its large cash transactions has always been an attractive
target for criminal elements. We have no reason to believe
that Indian gaming operations are emy more susceptible than
any other geuning operation nor do we think that Indian
gaming is in any way immune from such criminal elements. In
fact, some law enforcement problems have occurred. From a
law enforcement perspective, our greatest concern is that
the integrity of Indian gaming could be compromised through
criminal infiltration. In this regard, the BIA Division of
Law Enforcement Services (DLES), maintains close
communication with other law enforcement agencies to help
prevent orgemized crime involvement, to help keep
undesirables out of Indian geuning, suid to help maintain
public order.
Criminal activities known to be inherent to the gambling
industry reuige from sophisticated skimming and money
laundering operations to crude schemes to cheat at card
games or to rig gambling devices. Ovir involvement in cases
-4-
276
associated with traditional Orgemized Crime activities has
been secondary and limited. The lead agency with authority
to investigate traditional Orgemized Crime is the Federal
Bureau of Investigation ( FBI ) . To our knowledge , the FBI
has had only one orgcinized crime infiltration case that
involved Indian geuning. This case was successfully
prosecuted and resulted in imprisonment of ]cnown orgemized
crime figiires.
The DLES plays a more active role in cases which may be
referred to as non-traditional orgemized crime. For
excimple, small groups of individuals will band together
with the specific purpose to prey on gaming estciblishments.
These individuals conduct their illegal scams and cheating
for short periods of time before moving to another gaming
establishment. These criminals do not discriminate and have
targeted Indian emd non-Indian gaming operations . The
losses attributed to individuals in these groups may
constitute several thousand dollars a day. There have been
isolated cases of this type of criminal activity. Through a
coordinated and cooperative effort among the BIA and tribal,
state, and county law enforcement agencies these cases have
been successfully investigated cind prosecuted.
It is noteworthy to mention that in many instances, tribes
have provided valucJjle support in the successful
apprehension of these types of criminals. Most tribal
gaming enterprises have installed sophisticated video
surveillance systems which capture the criminals on tape.
The videotapes are later used as evidence in the prosecution
of these criminal cases. Moreover, many gaming operations
employ off-duty certified police officers who, because of
their certification status, Cein take immediate action when
confronted with criminal activity. We also have learned
that many tribal geiming operations employ retired police
277
officers in their security programs.
The DliES has also been instrumental in assisting our Office
of the Inspector General, Department of the Interior, with
the investigation of crimes involving theft or embezzlement.
These types of crimes may be committed by tribal officials,
gaming management personnel or employees. We have found in
these types of cases that the geuning operation often lacked
good internal controls and security procedures. In some
cases, an inadequate background investigation of gauning
employees also was a contributing factor to the criminal
activity.
Although the DLES does not always lead the investigation of
geuning offenses, it has been involved in every major case in
some meinner. The relationship that is maintained with the
various federal, state, local eind tribal law enforcement
agencies has proven to be a valucible tool for sharing
information and for monitoring the movement of suspected or
known criminal. On the national level, BIA law enforcement
officials along with tribal law enforcement officials work
closely with the top leadership of the International
Association of Chiefs of Police to keep the lines of
communication open on law enforcement issues related to
gaming .
In closing, I want to say that while we ceinnot guarantee
that Indiem gaming is free of criminal influences or that
nothing will go wrong, we do believe that there is
sufficient law enforcement presence amd oversight to
discourage and deter criminal elements. Inasmuch as Indian
gaming is the only gaming subject to Federal regulation,
every level of the nation's law enforcement structure has an
opportunity to become involved. Cooperative and ongoing
coordination among all law enforcement agencies including
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278
the BIA has become the mainstay of ferreting out criminal
problems. In the States of Arizona, South Dakota, Minnesota
and Wisconsin, the various Federal, state, local emd tribal
law enforcement agencies have orgemized formal task forces
under the auspices of the U.S. Attorney's Office to review
and address difficult or peculiar law enforcement problems
related to gaming. It seems appropriate then that these
States have become models of a new cooperative approach to
resolving law enforcement problems associated with all types
of gaming.
This concludes my prepared statement. I will be happy to
answer any questions that you or members of the Committee
may have.
-7-
279
United States Department of the Interior
OKFICE OF THE SECRETARY
WASHINGTON, DC. 20240
Honorable Bill Richardson ' -^ • ' i^'vj
Chairman, Subcommittee on Native American Affairs
Committee on Natural Resources ' >■■'■:
House of Representatives
Washington, DC 20515
Dear Mr. Richardson:
On October 5, 1993, the Department of the Interior and the Bureau of Indian
Affairs (BIA) provided testimony regarding law enforcement issues
associated with Indian gaming operations before the Subcommittee on
Native American Affairs House Committee on Natural Resources. The
Division of Law Enforcement was requested by the Honorable Neil
Abercrombie to provide comment on testimony provided by Mr. David B.
Palmer, Deputy Assistant Commissioner (Criminal Investigation), Internal
Revenue Service (IRS).
Mr. Palmer provided a general overview of various federal laws, including the
Bank Secrecy Act, designed to safeguard against money laundering and to
provide assistance to the IRS in its anti-money laundering enforcement and
tax administration. Mr. Palmer explained the limitations of these statutes as
they apply to tracking money transactions in Indian gaming operations.
The integrity of gaming operations must be safeguarded against incursions
by organized crime to ensure that Indian gaming remains a viable source of
economic development for Indian communities. To this end, the law
enforcement community needs to have available all of the tools and
resources to adequately protect the Indian community and to prevent illegal
activity from siphoning off much needed funds.
The Department of the Interior and the BIA concur with the recommendation
by the IRS that the Indian Gaming Regulatory Act (IGRA) and the Bank
Secrecy Act be amended to specify that Indian gaming operations be subject
to the Bank Secrecy Act rather than to Section 60501. Such an amendment
would ensure a more complete reporting and tracking process for cash
transactions over the threshold figure.
280
We thank the subcommittee for the opportunity to provide a response to
Mr. Palmer's testimony. Please contact this office if there are any further
questions regarding law enforcement issues related to Indian gaming
operations.
Sincerely,
^ . Ada Deer /
"'"^' V Assistant Secretary - Indian Affairs
281
Mr. Abercrombie. Thank you very much.
Would you care to have any of your associates comment? Or may
I just ask them directly? What is your pleasure? Obviously, they
have heard testimony all the way from the IRS to Mr. Trump's —
I guess you could call them contentions.
Ms. Deer. Let me say his selective interpretation of the facts.
Mr. Abercrombie. Yes, as you say.
In any event, would you care to call anyone in particular? Other-
wise, I have some
Ms. Deer. We are here at the committee's pleasure to answer
your questions.
Mr. Abercrombie. Okay.
Commissioner McKeag, am I pronouncing your name correctly?
Ms. McKeag. Correct.
Mr. Abercrombie. You are a Commissioner on the National In-
dian Gaming Commission, correct?
Ms. McKeag. That is correct.
Mr. Abercrombie. Do you have any comment on the contentions
that were made with respect to the ability of the Commission and/
or any of its affiliates, the Indian Gaming management staff, your
relationship to the Department of the Interior or other Federal De-
partments with respect to law enforcement, as to your ability to
oversee the gaming operations?
I am not speaking in the context of law enforcement, criminal ac-
tivity and penetration of gaming activities,
Ms. McKeag. I believe our chairman, Tony Hope, has a state-
ment which addresses the Commission's responsibilities in the area
of enforcement. I think he would like to summarize that statement,
and then we could discuss
Mr. Abercrombie. Oh, I'm soriy.
Mr. Hope, I didn't see your sign there, I beg your pardon. The
transcriber was in the way. I didn't recognize that you were there.
I beg your pardon.
Did you hear my question to the other commissioner?
Mr. Hope. Yes, I did.
Mr. Abercrombie. Would you care to comment? My question has
to do with your observations or commentary with respect to the
ability of existing institutions under the existing law to deal with
the penetration of Indian gaming by organized crime elements.
STATEMENT OF HON. ANTHONY J. HOPE
Mr. Hope. Yes, I would like to address that question, but would
you like my prepared remarks first?
Mr. Abercrombie. No. We will get to that.
Mr. Hope. The question has been raised as to how many people
are available for the enforcement of Indian gaming as compared to,
say New Jersey. Grenerally, New Jersey has 905 people. They have
adopted a particular system of gaming enforcement which includes
regulating paper napkins in the bars and includes personnel whose
job it is to go around and count the number of bar stools to make
sure that they conform to the square foot area of the casinos in
terms of permissible numbers of bar stools.
We do not feel that that is the regulatory scheme that Indian
gaming needs or that should be followed. We prefer the Nevada
282
concept more as embodied in the Act which essentially provides
that the tribes, as owners, are the primary regulators in Class II
gaming and work with the States to determine jurisdiction in Class
II gaming.
As backup, in terms of enforcement or regulation, we have avail-
able approximately 10,000 people to regulate gaming nationwide.
We have 87 U.S. attorneys and their forces. We have all of the FBI
that we need. We have the State groups in those 18 States with
compacts which are generally run out of their attorney generals' of-
fice. We have those staffs available. We have different staffs that
do background investigations.
Within my own Department, we have very few people. As here
before you, you see myself, Commissioner McKeag; Commissioner
Joel Frank; and my General Counsel, Michael Cox.
We have a total of 27 people, but we have the ability and the au-
thority to farm out to the private sector or to tribes or to other Fed-
eral agencies and to hire for anything that we need done. There is
a vast array of people available for regulation.
The regulatory responsibilities are divided into two groups. Class
III and Class II. We fully recognize that casinos need a greater
amount of regulation than do bingo halls. My personnel have the
responsibility for the oversight of the day-to-day operation of the
bingo halls. These are places where it would be very difficult to
launder money. A $10,000 transaction would buy you a whole stack
of bingo pads but they couldn't be converted back into money.
The casinos are regulated under a tribal-State compact where
the State, contrary to what I have heard in prior panels, has the
right to negotiate for reimbursement of any expenses that are going
to be incurred for regulation of these casinos. They can get the
money back through the compact process from the tribes. They can
insist on all reasonable regulatory requirements. The Commission
performs background investigations on people going into Class II
insofar as they are owners of management contracts. As such, we
have our own screening processes, some of which carries over into
Class III, because a lot of the Class III contracts have Class II ele-
ments within them and so will be conducting
Mr. Abercrombie. Commissioner Hope, many people who are as-
sociated with the law and the passage of the law understand the
differences between Class I, Class II, and Class III, but for pur-
poses of clarification and the record, would you differentiate the
three classes? I know you do that in your testimony.
Why don't we just have your testimony submitted for the record,
and you can concentrate just on the final page of conclusions and
the differentiation in the classes.
Mr. Hope. Please, if you would submit for the record. Thank you.
[Prepared statement of Mr. Hope follows:]
283
TESTIMONY OF
ANTHONY J. HOPE
CHAIRMAN, NATIONAL INDIAN GAMING COMMISSION
BEFORE
THE HOUSE COMMITTEE ON NATURAL RESOURCES
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
OCTOBER 5, 199 3
Mr. Chairman, Members of the Committee, thank you for the
opportunity to appear before you today. My name is Tony Hope. I
am the Chairman of the National Indian Gaming Commission. With me
today are Commissioner Jana McKeag of the Cherokee Nation of
Oklahoma, Commissioner Joel M. Frank, Sr. of the Seminole Tribe of
Florida and General Counsel Michael D. Cox.
The Indian Gaming Regulatory Act of 1988 (IGRA) was enacted as
a response to the proliferation of tribal gaming establishments in
Indian country operating without regulatory oversight by either the
federal government or the states. The IGRA provides a regulatory
framework for regulating Indian gaming by dividing gaming into
three (3) classes, establishing the National Indian Gaming
Commission to oversee the regulation of class II gaming, and
authorizing Indian tribes and states to enter into compacts for the
regulation of class III gaming.
Class I gaming (social games or traditional tribal games
played in connections with tribal ceremonies) is regulated under
the exclusive jurisdiction of the tribes. Class II gaming (bingo,
pull-tabs and related games) is regulated by the tribes, but with
oversight by the National Indian Gaming Commission. Class III
gaming (all other gaming, including horse racing, blackjack,
roulette, slot machines, lotteries and craps) is regulated under
the terms of a compact between the tribe and the state.
The Commission is an independent regulatory agency
administratively located within the Department of the Interior.
Under the IGRA, the Commission's primary role is to monitor and
oversee the regulation of class II gaming operations. The
Commission also approves class II and class III tribal gaming
ordinances and management contracts. It has the authority to
impose civil penalties or to close a gaming establishment for
substantial violations of the IGRA, the regulations promulgated by
the Commission, or tribal gaming ordinances.
284
Under the IGRA, the day-to-day regulation of class II gaming
is primarily the responsibility of the tribe, while the day-to-day
regulation of class III gaming is as negotiated and set forth in
the compact between the tribe and the state.
Although law enforcement is a vital tool in the regulatory
process, the regulatory structure of the IGRA divides enforcement
among several different entities. For example, the U. S. Attorneys
are charged with enforcement of the Johnson Act (15 U.S.C. §1175),
theft from Indian gaming establishments (18 U.S.C. §1167 and 1168)
and state gambling laws in the absence of a tribal-state compact
(18 U.S.C. §1166); the FBI is charged with investigating crimes on
Indian reservations; the tribes and the states can agree that the
states and/or the tribes will investigate and prosecute crimes
involving class III gaming. Fraud could be under the jurisdiction
of the federal, state and tribal governments.
The Commission has civil enforcement authority for violations
of the IGRA, tribal ordinances, management contracts, and
Commission regulations. Additionally, it conducts background
investigations on entities and individuals with a financial
interest in, or management responsibility for class II management
contracts, but not for class III management contracts.
We have in the past and will continue to work with the FBI,
the IRS, the U.S. Attorneys, and others to develop and improve
procedures for information sharing, the conduct of background
investigations, and the coordination of enforcement procedures. As
regulators, we meet regularly with individuals and organizations to
discuss our respective roles and responsibilities in Indian gaming.
These include the numerous gaming tribes and associations, as well
as the Conference of Western Attorneys General, the National
Association of Attorneys General, the National Governor's
Association, the Attorney General's Advisory Committee on Indian
Affairs, and the Indian Section of the American Bar Association.
The Commission is charged with approving all class II and
class III management contracts, and with determining the
suitability of owners of management contracts for all class II
gaming operations. Some of these background investigations will be
done quite rapidly while others may take six months or more to
complete. Determinations of unsuitability and the consequent
banning of individuals from significant roles in Indian gaming is
perhaps the most important "law enforcement" role of the
Commission. These determinations include such investigative
procedures as:
o Verifying the information submitted by the applicant by
written or oral communications.
285
o Inquiring into the applicant's prior activities, criminal
record, if any, and reputation, habits and associations;
conducting interviews with knowledgeable people familiar with
the applicant such as former employers, personal references,
business associates, and others.
o Documenting the disposition of all potential problem areas
noted and disqualifying information obtained.
The Chairman may approve a management contract only if, among
other things, it meets the standards of part 531 and §533.3 of the
Commission's regulations. However, the Chairman shall disapprove
a management contract for class II gaming if he or she determines
that —
o any person with a direct or indirect financial interest in, or
having management responsibility for, a management contract:
is an elected member of the governing body of the tribe
that is party to the management contract;
has been convicted of any felony or any misdemeanor
gaming offense;
has knowingly and willfully provided materially false
statements or information to the Commission or to a
tribe;
has refused to respond to questions asked by the Chairman
in accordance with his responsibilities under this part;
or
is determined by the Chairman to be a person whose prior
activities, criminal record, if any, or reputation,
habits, and associations pose a threat to the public
interest or to the effective regulation and control of
gaming, or create or enhance the dangers of unsuitable,
unfair, or illegal practices, methods, and activities in
the conduct of gaming or the carrying on of related
business and financial arrangements;
o The management contractor or its agents have unduly interfered
with or influenced for advantage, or have tried to unduly
interfere with or influence for advantage, any decision or
process of tribal government relating to the gaming operation;
or
o The management contractor or its agents has deliberately or
substantially failed to follow the terms of the management
contract or the tribal gaming ordinance or resolution adopted
and approved pursuant to this Act; or
84-760 O - 94 - 1 n
286
o A trustee, exercising the skill and diligence to which a
trustee is commonly held, would not approve the contract.
The Chairman may disapprove a management contract for class III
gaming if he or she determines that a person with a financial
interest in, or management responsibility for, a management
contract is a person whose prior activities, criminal record, if
any, or reputation, habits, and associations pose a threat to the
public interest or to the effective regulation and control of
gaming, or create or enhance the dangers of unsuitable, unfair, or
illegal practices, methods, and activities in the conduct of gaming
or the carrying on of related business and financial arrangements.
On February 22 of this year regulations covering the review
and approval of tribal gaming ordinances and management contracts
and compliance and enforcement procedures took effect. This has
allowed the Commission to begin the operational phase of its work.
Among other things, the Commission is in the process of initiating
civil enforcement actions. However, it would be inappropriate for
me to identify particular targets.
During this period the Commission has:
hired and trained six field representatives;
entered into a Memorandum of Understanding with the FBI
concerning criminal records checks;
made site visits to substantially all gaming tribes and
tribal gaming operations to —
inform them of the regulatory requirements to which
they are now subject, and
- gather information needed by the Commission for
regulatory purposes;
hired financial analysts;
processed hundreds of fingerprint cards for the tribes
pursuant to a new FBI policy statement;
begun reviewing and approving —
tribal gaming ordinances, and
management contracts;
- begun conducting background investigations;
developed and issued guidance to the tribes in the form
of Tribal Bulletins (copies being furnished for the
record) ; and
developed a model gaming ordinance for the tribes.
It is the stated policy of the Commission to work with the
tribes to obtain compliance with the IGRA, the Commission's
regulations, and the tribal ordinances. We believe that this
approach is in the best long term economic interest of the tribes,
and vital to achievement of tribal self-sufficiency. We will be
happy to answer any questions.
Thank you.
287
NATIONAL INDIAN GAMING COMMISSION
BULLETIN
No. 93-2 June 22, 1993
Subject: Procedures for Processing Fingerprint Cards
The National Indian Gaming Commission (NIGC) is currently implementing procedures to
process fingerprint cards submitted by tribes as part of their employee background
investigations. This bulletin is intended to provide you witli information concerning the steps
to be followed to ensure the prompt processing of all submitted fingerprint cards.
Under the NIGC's ordinance regulations, prior to the issuance of a license, a tribe is
required to perform a fingerprint check, through the FBI records system, as part of the
background investigation on each individual who has applied for a position as a key
employee or primary management official in its .aming opcration[s]. The information
obtained as a result of this fingerprint check will assist the tribe in determining the
applicant's suitability for employment.
The FBI has recently issued a policy statement concerning access to criminal history record
information (CHRI) by the NIGC, slate agencies and tribal governments. A copy of this
policy statement is enclosed for your information. As you will note, under this policy the
NIGC is authorized to process fingerprint cards and issue copies of the reports of the
fingerprint checks directly to the requesting tribes. Because of the highly sensitive nature of
the reports, the FBI has required the NIGC to take steps to ensure that there is no improper
dissemination of CHRI, that liie information is used only for authorized purposes, and that
the CHRI is securely maintained.
In order to ensure compliance with these FBI requirements, it is necessary for each tribe
receiving CHRI to execute the enclosed Memorandum of Understanding (MOU). The MOU
also places certain restrictions on the use of CHRI in administrative and judicial proceedings,
reserves NIGC's right to furnish the tribe CHRI in the form of summary memoranda,
restricts the availability of NIGC employees to testify relative to CHRI, reserves NIGC's
right to discontinue providing CHRI where a tribe has failed to comply with the terms of the
MOU, and acknowledges the FBI's rigiit to impose additional restrictions on the release of
CHRI.
288
FBI policy also authorizes CHRI access by state regulatory agencies and tribal governments
under certain specified conditions (jeg Policy Statement at pages 4-5). Tribes should
determine if the conditions exist which would permit them to process fingerprint cards
directly or through a sUte agency. Where the qualifying conditions have been met, the tribe
may elect to use such agencies to process its fingerprint cards. It should be noted, however,
that under current FBI policy, such requests will not routinely be processed through Bureau
of Indian Affairs (BIA) law enforcement offices. The language contained in the Preamble to
the NIGC's final ordinance regulations indicating that the BIA is available for such purposes
is inaccurate and shpuld be disregarded. BIA law enforcement offices may, however,
continue to take the fingerprints of applicants for key employee and primary management
official positions and forward the subject fingerprint cards to the NIGC for processing.
Set forth below are the steps to be followed whenever a tribe elects to use the NIGC to
process the fingerprints cards of applicants for employment in its gaming operations:
1. A duly authorized official of the tribe should execute the enclosed MOU and return it to
the NIGC at the earliest possible date. No copies of criminal history reports will be
forwarded to a tribe until the NIGC has received a properly executed MOU.
2. The tribe should notify the NIGC which law enforcement agency/office(s) will be
taking the fingerprints for the tribe and designate a contact person at the identified
agency/of fice(s). In addition, the tribe should indicate the number of cards which the NIGC
should send to this agency/office making allowances for lost or damaged cards. The
forwarded cards will refiect the Originating Agency Identifier (ORI) number assigned to the
NIGC by the FBI.
3. The tribe should provide NIGC with a list of individuals whose fingerprint cards the
NIGC will be receiving from the law enforcement agency/office and a check to the National
Indian Gaming Commission to cover the cost of processing those cards (number of cards X
$35.00). The list should also contain the social security number and date of birth of each
listed individual and the name of tlie law enforcement agency/office taking the fingerprints.
The $35.00 per card charge for processing consists of a $17.00 fee charged by the FBI and
$18.00 to cover NIGC's costs, including personnel, postage and telephone.
4. Once fingerprints have been taken, the agency taking the prints should forward the
completed cards directly to the NIGC. The NIGC will process only those cards received
directly from a law enforcement agency.
289
5. Once the NIGC receives: I) the completed fingerprint card: 2) the required list of the
individuals whose fingerprint cards the NIGC will be receiving and 3^ a check to cover costs.
it will forward the fingerprint cards to the FBI for processing. The FBI is currently
averaging 21 working days to process a fingerprint card.
6. Upon completion of the fingerprint check, the FBI will forward a report of the findings
to the NIGC. Subject to compliance with the conditions set fortli in the enclosed
Memorandum of Understanding (MOU), NIGC will forward a copy of this report to the
submitting tribe to be used in determining of the suitability of Uie applicant for employment
in the tribe's gaming operation.
7. The NIGC will retain the original reports and the processed fingerprint cards and will
incorporate them into the Indian Gaming Individual Records System. This system will be
subject to the Commission's Privacy Act Procedures, see 25 CFR Sections 515.1-12 (58 FR
5814-5818, January 22, 1993).
NIGC regulations require a tribe to perform a background check on applicants for key
employee or management official positions following approval of a tribal ordinance by the
Chairman. In order to facilitate the prompt distribution of CHRI, however, the NIGC will
process fingerprint card submissions which meet the requirements of Paragraph 5 prior the
approval of a gaming ordinance.
It is important to note, however, that until such time a tribe's gaming ordinance has been
approved by the Chairman, the procedures for forwarding employee applications and
investigative reports set forth in Sections 558.3 and 558.4 cannot be initiated by tlie tribe
and the time periods contained in those provisions do not begin to run. It should be further
noted that if the tribe is conducting a background investigation consistent with the
requirements of Part 556, the CHRI constitutes only one of a number of sources of
information which the tribe must consider in making eligibility' determinations for
employment in its gaming operation.
These procedures are effective immediately.
For additional information contact Fingerprint Processing at (202) 632-7003.
290
EBI POLICY ON INDIAN GAMING REGULATORY ACT SUBMISSIONS BY THE
NATIONAL INDIAN GAMING COMMISSION (NIGC), STATE
IDENTIFICATION BUREAUS, AND TRIBAL GOVERNMENTS
Pursuant to the Indian Gaming Regulatory Act (codified
at Title 25, United States Code, Section 2701 et.seq. ) . the NIGC
promulgated regulations defining various NIGC gaming
responsibilities (25 Code of Federal Regulations, Part 501
et.seq. , published January 22, 1993 in the Federal Register) .
NIGC contacted the Access Integrity Unit (AIU), Audit Section,
Criminal Justice Information Services Division (CJIS), and the
Identification Division (ID), with respect to access to FBI
criminal history record information under the Act and NIGC
regulations. AIU has also been contacted by several state
Identification bureaus on the same subject. This statement of
policy, intended for distribution to the NIGC, Indian tribal
governments, and state bureaus, sets out FBI policy and
procedures with respect to requests for access to FBI criminal
liistory records under the Act, the NIGC regulations, state/tribal
compacts, and state law.
1 ) Requests from the NIGC -
The Indian Gaming Regulatory Act does not specifically
authorize NIGC access to FBI criminal history record Information
(CHRI) for baclcground screening purposes. Section 2708 of Title
25 of the United States Code (U.S.C. ) (which is part of the Indian
Gaming Regulatory Act, as codified) reads as follows:
"The Commission may secure from any department'
or agency of the United States information
necessary to carry out this Act. Upon the
request of the Chairman, the head of such
department or agency shall furnish such
information to the Commission, unless otherwise
prohibited by law."
We believe that Section 2708 itself provides sufficient basis for
providing FBI CHRI to NIGC "unless otherwise prohibited by law."
The Menard case effectively prohibited dissemination of CHRI to
state and local agencies for licensing and employment purposes.
Menard did not impose a similar prohibition on dissemination of
CHRI to Federal agencies. 28 C.F.R., Section 20.33 explicitly
•authorizes dissemination to Federal agencies authorized by
Federal statute or executive order. It is our opinion that
Section 2708 authorizes direct dissemination of CHRI to NIGC for,
under the standard established by 28 U.S.C, Section 534, its
"official use. "
291
The extent to which "official use" encompasses access
to CHRI by NIGC is determined by NIGC's duties as defined by the
Act. NIGC has direct authority to approve management contracts
for both Class II (bingo and related activities) and Class III
(casino-type operations) activities. 25 U.S.C., Section
2705(a)(4). The nature of the bac)cground screening to be
undertaken, at least as to Class II management contracts and
particular persons stated therein, is defined by Section 2711
(a)(1) and (e). Clearly Class II management contract approvals
require criminal history screening of persons intimately
connected to the management contractor (such as directors of a
corporate contractor). Submissions to the FBI by NIGC for this
purpose are authorized.
NIGC'S responsibility with respect to approval of Class
III management contracts does not appear to include screening
based on criminal history information. Authority for Class -III
screening is found in Section 2710(d)(9), which specifically
excludes the reviews in Section 2711(a) and (e), which establish
criminal history record screening. NIGC's own Interpretation in
its commentary to 25 C.F.R., Parts 531, 533, 535, 537, and 539 is
consistent with this interpretation, insofar as this exclusion
assigns responsibility to the tribes for performance of
preapproval criminal history screening. NIGC's regulations (and
commentary), however, express its determination, under NIGC's
general authority to protect tribes from organized crime and
corrupting influences, to disapprove or revoke management
contracts, including Class III contracts, if management personnel
have disqualifying criminal records. See 25 C.F.R., Sections
533.6 and 533.1. This interpretation is entirely consistent with
the purposes of the Act, and therefore, submissions by NIGC
relating to approval, disapproval, or revocation of Class III
management contracts will also be accepted and processed by the
FBI.
NIGC, in its regulations, also asserts authority to
conduct background screening of primary management officials and
key employees for gaming conducted by tribes without third-party
management contracts. Under Section 2710(c)(1) and (2), NIGC is
authorized to consult with law enforcement officials concerning
Class II gaming licenses issued by a tribe, and to facilitate
license suspension if "primary management official(s) or key
employee(s)" fails to meet standards set out in Section
2710(b) (2) (F) (ii) (II) . That subparagraph provides for
disqualification of primary management officials or key employees
for, among other reasons, "criminal record .. .pose(s) a threat to
the public interest or to the effective regulation of gaming."
Based on the combination of these provisions, NIGC's official use
of CHRI extends to background screening of Class II primary
management officials and key employees.
292
NIGC's authority as to Class III primary management
officials and key employees is less clear, but in our view, valid
nonetheless. Parts 556 and 558 of the NIGC regulations assert
this authority unless a tribal-state compact has allocated this
responsibility exclusively to the state or state agencies. As
the agency charged with effectuation of the IGRA, NIGC's
Interpretation of its provisions must be viewed as authoritative.
As such, NIGC fingerprint submissions for Class III primary
management officials and key employees, absent a preemptive
tribal-state compact, are within NIGC's "official use" and will
be processed by the FBI.
Our review of the Act reveals no explicit authority for
direct access to FBI CHRI by Indian tribal governments. As
previously stated. Section 2708 does not constitute, in our view,
such an authorization because of the ending phrase "unless
otherwise prohibited by law." The Menard case is such a -. -
prohibition. This prohibition is now set out in 28 C.F.R. ,
Section 20.33. The only exception by which state and local
agencies may access FBI CHRI is through state enactment of Pub.L.
92-544 statutes or an express Federal statute. As stated.
Section 2708 by its own terms is not such a Federal statute.
We also do not believe that language in the Act
requiring criminal background checks or defining eligibility in
relation to the existence or nonexistence of criminal records
constitutes such an express Federal statute. Our longstanding
policy has been that Congress must clearly define an exception to
the Menard prohibition authorizing access to CHRI for non-Federal
licensing purposes. The FBI has never recognized such an
exception solely from language indicating that background
screening should be undertaken, nor from language indicating that
some form of criminal record is a disqualification from licensing
or employment. We have reviewed the statutory history of the Act
and can find no indication that Congress intended for tribal
governments to access FBI CHRI. In fact, we believe Section 2708
.to state the contrary intent.
Access by the tribes may be claimed based on Section
2710(c)(3) and (4) of the Act. Under that Section, NIGC may
issue a certificate of self regulation to a tribe operating Class
II games, based on, inter alia, the implementation of an adequate
system for " investigation ... of all employees." Perhaps more
importantly, NIGC must review tribal ordinances authorizing Class
II gaming to ensure, inter alia, that the ordinance ensures that
background investigations are conducted in primary management
officials and key employees. Section 2710 ( b) 2 ) (F) . This
ordinance must also establish a standard for disqualification of
such officials or key employees, which includes "criminal record"
which would "pose a threat to the public interests or to the
effective regulation of gaming." Section 2710 ( b) ( 2 ) ( F) ( ii ) ( II ) .
293
These provisions discussed are not similar to nor do
they approach the explicitness of previous Federally legislated
authorizations for non-Federal agency access to CHRI. See for
example 15 U.S.C., Section 78q ("Notwithstanding any other
provision of law, in providing identification and processing
functions, the Attorney General shall provide the Commission and
self-regulatory organizations designated by the Commission with
access to all criminal history record information."). An
assertion by a tribe of direct access to FBI CHRI under these
provisions would be, in our view, erroneous.
Secondary dissemination of CHRI by NIGC is controlled by
28 C.F.R., Section 20.33(b) and 28 U.S.C, Section 534(b). Both
provisions authorize sanctions for secondary dissemination
outside the receiving department or "related agencies." A
related agency logically could be a tribal government or
subdivision thereof which is participating with NIGC in
background screening or activity related to official NIGC use of
CHRI as described above. The requirement of Section 534(a) that
the related agency must be a "governmental agency" must also be
met, so that secondary dissemination of CHRI to a tribal
government could only occur to a tribe recognized by the U.S. or
•a state as a valid tribal government.
The FBI has traditionally defined the boundaries of
authority for access to CHRI ( in the absence of a more
authoritative definition, such as by the Courts), and then allows
the accessing agency to screen its requests to ensure those
boundaries are respected. NIGC will be provided with an
Originating Agency Identifier (ORI) to allow for proper
submissions under its authority and should be informed of the
extent of that authority. Thereafter, submissions would not be
reviewed by the FBI for compliance, except to the extent that any
future audit program will review submissions and dissemination
logs.
2) Requests from State Regulatory Agencies -
Responsibility for regulation of Class III gaming is
joint between states and tribes. There is no language in the Act
authorizing states or tribes to receive FBI criminal history for
baclcground screening, and as discussed. Section 2708 does not
authorize access to CHRI by the tribes or state agencies. For
this reason Pub.L. 92-544 can be the only avenue by which
authorization can be established for access to FBI CHRI. If a
state enacts or has enacted a law pursuant to Pub.L. 92-544 for
bacJcground screening for gambling purposes and a state agency
designated thereunder has assumed responsibility for Indian
gaming (by state- tribal compact, for example), access to FBI CHRI
is authorized.
294
Note that the existence of a tribal-state compact
alpne does not authorize access to FBI records. Pub.L. 92-544
requires a state "statute." Our interpretation, supported by OLC
opinions, is that any law authorizing access under Pub.L. 92-544
must be legislatively enacted (or the equivalent to legislative
enactment). A state executive order or administrative
regulations cannot create a Pub.L. 92-544 authorization. The
compact we have previously reviewed, between the State of
Connecticut and the Mashantucket Tribe has been legislatively
recognized and is, therefore, a "state statute" under Pub.L.
92-544. Submissions will be accepted thereunder by the terms
created in that Compact.
Secondary dissemination to tribal governments would be
permissible under the same conditions specified in section one
(1) above. Such dissemination could occur to a lawfully
recognized tribal government which is assisting the designated
state agency with a background investigation and therefore has
need for such information.
3) Requests from Tribal governments -
As previously stated, the Act contains no language
purporting to authorize access to FBI records by tribal
governments and therefore, Pub.L. 92-544 is the only avenue for
such access. Pub.L. 92-544 authorizes such exchanges with state
and local governments' for noncriminal justice purposes pursuant
to a state statute. We believe that a recognized tribal
government can be an eligible governmental entity under Pub.L.
92-544, and therefore, can receive FBI records directly if
authorized by state statute (approved by AIU). A tribal
ordinance could not effect that authorization. A tribal-state
compact, as previously discussed, can effect such authorization
only if enacted (or the equivalent thereof) by a state
legislature.
No secondary dissemination would be permitted outside
the tribal government in any case, except to governmental
agencies assisting in any authorized background screening
activity.
As to both state and tribal requests, our mission will
be to review and approve the authorization requests by reviewing
statutes submitted under Pub.L. 92-544 and 28 C.F.R., Section
0.85(j). Once approved, the burden, as with all Pub.L. 92-544
submissions, then falls on the state bureaus to screen
submissions to ensure that any submission falls appropriately
under the authorized purpose.
295
Our analysis above reconciles existing law and
regulations concerning the FBI's authority to exchange criminal
history information with Federal, state, and local governmental
agencies and the IGRA and NIGC's regulations. As noted, the Act,
in distinguishing Class II and Class III gaming, creates somewhat
different regulatory schemes and, therefore, may impose different
duties on NIGC. Bingo (Class II) is widely legal for both
charitable and noncharitable purposes in most states. Thus, as
to Class II gaming, the Act clearly establishes NIGC
responsibility for screening of management contractors and
associated individuals, when gaming is contracted out by a tribe,
and primary management officials and key employees, when the
gaming is conducted by a tribe itself.
NIGC's role is more limited in Class III gaming under
the IGRA, especially when tribal-state compacts are in existence.
NIGC will be able to submit fingerprints for management .
contractors and associated individuals. In all other areas, the
high degree of regulation accorded to Class III gaming is
generally to be accomplished jointly by tribes and states.
Background screening of primary management officials and key
employees may be conducted by NIGC, unless preempted by a tribal-
state compact which places this responsibility elsewhere. It
should be noted that background screening on gaming employees who
do not fall within the definition of "primary management
•official" or "key employee" is within the exclusive province of
Pub.L. 92-544 approved statutory enactments.
Submission Procedures
1 ) NIGC will be informed of the interpretation
contained herein, along with the following information:
a) That NIGC will be assigned an appropriate OKI and
given fingerprint cards for its submissions as authorized;
b) That NIGC submissions will be bille-J to NIGC at the
existing governmental rate of $17.00.
2) That state identification bureaus will be informed
of the interpretation contained herein, along with the following
information:
a) That state statutes and supporting materials will
require review under 28 C.F.R. , Section 0.85(j) and Pub.L.
92-544 by the Access Integrity Unit;
296
b) That where such processes are in existence the
processing of fingerprint cards for authorized state
agencies will be subject to the existing Federal user fee
of $23.00.
c) That authorized tribal governments may submit through
the appropriate state identification bureau on a tribal
ORI to be paid at $23.00.
297
MEMORANDUM OF UNDERSTANDING
REGARDING THE DISSEMINATION OF CRIMINAL HISTORY RECORD
INFORMATION BY THE NATIONAL INDIAN GAMING COMMISSION
In order to facilitate the undersigned tribe (Tribe) in determining the suitability of
individuals who have applied for employment as key employees and primary management
officials in its gaming operations, the National Indian Gaming Commission (NIGC) will be
obtaining criminal history record information (CHRI) from the Federal Bureau of Investigation
(FBI) on these individuals and disseminating such information to the Tribe.
This memorandum sets forth the following conditions under which the NIGC will provide
CHRI to the Tribe:
1. The FBI has retained the right to approve the dissemination of CHRI and may at some
future date prohibit the NIGC from disseminating CHRI. It is understood by the Tribe that the
NIGC will not release any information without having received all required prior approvals from
the FBI and will not release any information where prohibited from doing so by the FBI. It is
further understood that the FBI may impose restrictions on the release and use of the CHRI in
addition to those imposed by the NIGC and that the Tribe will be subject to all such additional
restrictions.
2. The CHRI provided by the NIGC may be used by the Tribe solely for the purpose of
determining a particular applicant's suitability for employment in the Tribe's gaming
operation(s).
3. NIGC responses will only contain CHRI information on a particular applicant and will
not contain recommendations or conclusions of the NIGC. The NIGC reserves the right to
furnish to the Tribe summary memoranda containing the results of the information search of the
criminal history records maintained by the FBI.
4. CHRI provided to the Tribe shall be afforded proper security. The Tribe shall ensure
that access to all CHRI furnished by the NIGC, including all summary memoranda, is restricted
to personnel directly involved in licensing deliberations. The Tribe shall maintain records of
the identities of all persons receiving access to the CHRI and such records shall be furnished to
the NIGC upon request.
298
5. Except in connection with proceedings related to the Tribe's licensing determinations for
gaming employees, neither the CHRI nor any summary memoranda furnished by the NIGC shall
be reproduced, disseminated, or introduced in a court of law or administrative hearing, without
the prior written consent of the NIGC.
6. Employees, past and present, of the NIGC will not be called as witnesses to testify
relative to CHRI disseminated to the Tribe before any Tribal court or in any Tribal
administrative hearings, except in extraordinary circumstances to be determined by the NIGC.
7. Any request for access to the provided CHRI-by the-individual who is the subject of the
CHRI shall be referred to the NIGC for processing and an appropriate response pursuant to the
Freedom of Information and Privacy Acts (Title 5, USC, Section 552 and 552a).
8. Tribal authorities will be promptly notified in the event that the NIGC determines that
it is necessary to discontinue providing CHRI information to the Tribe (either in whole or in
part) due to the Tribe's failure to comply with the conditions set forth in this memorandum.
The Tribe acknowledges and consents to the above-stated conditions on this .
day of , 199_.
Tribe
Authorized Tribal OfHcial
299
Mr, Hope. Class I is traditional tribal games generally played by
tribal members in conjunction with tribal ceremonies; that is com-
pletely regulated by the tribes. Class II gaming is essentially bingo,
pull tabs and associated games. Those are regulated primarily by
the tribes with oversight by the Commission. Class III is all other
gaming, including electronic, electromagnetic machine games,
poker, jai alai, horse racing, craps, everything else — lotteries, ev-
er3rthing else that you can gamble on.
Mr. Abercrombie. And Class III is generally the bone of conten-
tion with respect to the publicity and the confrontations. Is that not
the case?
Mr. Hope. That is true. Class 3 competes with Nevada and At-
lantic City.
Mr. Abercrombie. Okay. Continue.
Mr. Hope. In most of the examples that were cited by Mr.
Torricelli and Mr. Trump as to organized — their alleged 22 orga-
nized crime incidents, occurred prior to the passage of the Act.
Some of these incidents I am familiar with. Some of them do not
involve indication of organized crime. I do not have the whole list,
I just heard them mention seven or eight of them.
There are a couple of issues as to whether or not various people
are members of organized crime. In several cases I have ongoing
investigations the contents of which I am not able to divulge at this
time.
In terms of whether or not organized crime is engaged in Indian
gaming, I don't know. We have not found it. I have had many con-
versations with Mr. Maloney both before and after his testimony
last year. In fact, I was on that panel when he gave his testimony,
and we will be vigilant in looking for it, and when we find it, we
will take our regulatory action
Mr. Abercrombie. Excuse me, Mr. Hope. Mr. Maloney, for pur-
poses of the record, is a member of the Department of Justice?
Mr. Hope. Yes.
Mr. Abercrombie. Okay. Thank you.
Mr. Hope. His testimony has been included in this record.
When I find organized crime, I will take my regulatory action,
which is twofold, to get the people out of Indian gaming, and, if I
know of a crime or evidence of a crime, to turn it over to the appro-
priate authorities.
Enforcement in our organization is civil. We can issue fines for
the violation of our regulations, tribal regulations, and the Act, and
we can issue orders of closure, but criminal prosecution and crimi-
nal enforcement lies with the Justice Department with whom we
coordinate.
I think that the regulatory structure that was enacted in 1988
is becoming sufficient. It is not yet sufficient because there is still
a certain amount of litigation going on as to the meaning of dif-
ferent parts of the law, particularly machine games. We thought
the litigation had been put to bed in May with the decision in the
D.C. Court. But it was resurrected last week in an appeal where
a stay was granted by the D.C. Circuit Court. If you have any ques-
tions about the stay, I direct them to my General Counsel, Mr. Cox.
But it is my feeling, and it is my experience, that there are suffi-
cient controls and there is sufficient authority to carry out the ef-
300
fective regulation of gaming. It is just that the perception of some
of the people on the prior panels is that it is not here yet. And that
perception is probably accurate because, as Mr. Torricelli said, we
did let gaming run loose for about 12 or 14 years before the Act
became imposed upon it and we are playing catchup. It will take
some time to weed out the people that need to be weeded out. But
the process is under way, and I feel that the tools are adequate to
the job.
Mr. Abercrombie. Mr. Calvert, would you care to make any com-
mentary or questions at this point?
Mr. Calvert. Thank you, Mr. Chairman. I just, as you know,
just walked back into the hearing.
Mr. Abercrombie. Would you like a moment to gather your
thoughts?
Mr. Calvert. Just a few more minutes, if you wouldn't mind.
Mr. Abercrombie. Sure.
Mr. Quasula, you are in charge of the Division of Law Enforce-
ment; is that correct?
Mr. Quasula. For the Bureau of Indian Affairs, yes, sir.
Mr. Abercrombie. Well, you just heard Commissioner Hope,
Chairman Hope's remarks. Would you care to amplify on those re-
marks in the context of the question I asked about the ability of
those engaged — those tribes engaged in gaming, to forestall pene-
tration by organized crime?
Mr. Quasula. I would have to agree that there has been a con-
certed effort by tribal leadership and others in Indian gaming to
ferret out what is there. Going back to Mr. Trump's statement, I
have got to disagree in that we have a strong relationship amongst
BIA law enforcement people, tribal law enforcement people. States,
counties, the FBI, the Office of Inspector General, not only with
law enforcement issues that come up with Indian gaming, but with
any law enforcement matters that arise on Indian reservations.
I think it is fair to say that we believe that we always could do
with more people, and it behooves us to establish lines of commu-
nication and have a cooperative working relationship with any law
enforcement agency.
Mr. Abercrombie. Have you ever had a request made of you by
a State or any other regulatory agency, authorized regulatory agen-
cy under a compact agreement, which you refused or which you ar-
gued with?
Mr. Quasula. No. I think that we have cooperated to the hilt.
We have made a deliberate effort to share names with State law
enforcement people, with county law enforcement people, with the
FBI. In fact, we have a written Memorandum of Understanding
with the FBI to check, name check, fingerprint check, for anybody
that wants to get into Indian gaming. And we have been more than
cooperative with anybody that is interested in making sure that
people who are involved in Indian gaming are on the up and up.
Mr. Abercrombie. Has any agency within which there is an
agreement under compact arrangements, ever registered a formal
complaint with your division as to a lack of cooperation with re-
spect to law enforcement?
Mr. Quasula. Not to my knowledge, no.
Mr. Abercrombie. How long have you been on the job?
301
Mr. QUASULA. With the Bureau of Indian Affairs, a little over 19
years; here at headquarters, a little less than three years.
Mr. Abercrombie. So you have actually been in the law enforce-
ment end of this for the majority of the time the law has been in
existence?
Mr. QuASULA. That is correct.
Mr. Abercrombie. You have heard the testimony of Commis-
sioner Hope and Secretary Deer of the IRS. Now, they didn't go
into, Mr. Palmer didn't go into necessarily all of the testimony, you
may not have had a chance to read it yet. I commend it to your
attention. But from what you heard, could you comment on the
suggestions of the IRS with respect to improvements that might be
made under the law in the area of the Bank Secrecy Act, et cetera,
in the context of improving the capacity of Indian gaming to fore-
stall criminal activity?
Mr. QuASULA. You know, personally, I am not totally familiar
with the statutes they are talking about because that is not some-
thing we do every day. We rely on IRS and others to have the ex-
pertise. But I would think that across the board, if it is going to
ensure just that much more that Indian gaming is on the up and
up, then I would think that anybody would welcome that.
Mr. Abercrombie. Well, I think the thrust, just so I make sure
that my questions to you are clear, the thrust of the IRS testimony
and the Department of Justice testimony was not that the casinos
were acting in a derelict manner, but rather that those individuals
and groups who might want to take advantage of the casino oper-
ations for their criminal activity could be more thwarted than they
are now, should their recommendations be put into place.
Mr. Ajbercrombie. Secretary Deer, do you have a comment on
that testimony?
Ms. Deer. I have not had an opportunity to read it, but I believe
that the Indian tribes are open for ideas to improve operations and
to keep the operations accountable, honest and efficient, and so it
would be my assumption that there would be a discussion and
study of this, and if this was determined to improve the operations,
then it probably should be.
Mr. Abercrombie. Chairman Hope?
Mr. Hope. Mr. Chairman, we serve on the committee with the
Treasury, working on this issue, and to my knowledge, there is no
Indian tribe which has an objection to this being incorporated in
the process.
Mr. Abercrombie. What I would ask you to do, then, is take a
look at the IRS testimony. Perhaps over the next two weeks while
the record is open, you might want to submit some commentary on
it or some observations on that testimony for the record. Could I
ask you to do that? I think it would prove very helpful to us.
Commissioner McKeag, I started with you, and you didn't get an
opportunity to speak. Would you care to comment on an3rthing that
has been said to this point or amplify any other — I would like you
to answer, if you could, in a further context — Mr. Trump made,
from my point of view, some rather unfortunate observations with
respect to the capacity or desire of Indians to address some of the
questions that he raised. I presume as a member of the Indian
Gaming Commission you have a view on that?
302
Ms. McKeag. Well, quite frankly, I wish one of the Members of
the committee had asked Mr. Trump if he ever visited an Indian
casino or an Indian bingo operation, but be that as it may, I do
want to emphasize what the Commission's role is as part of this
Act. Mr. Hope said we have civil enforcement responsibility. We are
the preventive medicine arm of the Act. We do the background in-
vestigations which assure that the criminal element does not be-
come involved in Indian gaming.
In the existing operations, we can call in any contract where we
suspect there may be some problem. We have hired field staff
which have visited substantially all gaming operation in the entire
country, since becoming operational on February 22nd of this year.
In the testimony, there is a list of what we have done, including
working with the FBI, with our memorandums of understanding,
so that we can process fingerprints. We can have access to the
FBI's criminal records that are available to us, so that we can find
out whether or not there may be some criminal element. When it
comes to actually enforcing that, we have to turn to the FBI, and
they do the actual enforcement of the criminal problems on the res-
ervation.
Mr. Abercrombie. Thank you.
Commissioner Frank, would you care to comment at this junc-
ture?
STATEMENT OF HON. JOEL FRANK
Mr. Frank. Thank you, Mr. Chairman.
One of the things I would also like to point out is that the act
does say that we are oversight, and that we have oversight respon-
sibility when it comes to the regulating of Indian gaming, and that
the primary responsibility of regulating lies with the tribes. And to
that end, I think that some of the earlier comments that were
made by earlier panels suggested that there was no regulation
whatsoever, that, I could point out, that there are tribes out there
that do have the sophistication and the capability of regulating
maybe far superior than maybe some other States or organizations
in law enforcement may have or may not have, and that they have
demonstrated that.
I think there is one group down in Florida that have exercised
their governmental regulatory responsibilities in trying to make
sure that there are no criminsd elements in their gaming operation,
and that is still going on as an ongoing review.
I think that as far as a review is concerned, that is something
that is never going to cease, and I think that as more tribes expand
their regulatory enforcement capabilities, we are going to see even
greater scrutiny than what the current law in which Indian gaming
is now currently regulated. So I just wanted to point that out.
Mr. Abercrombie. Thank you.
I don't want to anticipate Mr. Calvert's question, but he did raise
some questions before about possible management contracts with
existing casino operations and Class III operations in California
and some of the questions that that might raise.
If you are ready, Mr. Calvert, having established that context,
which I found very interesting and informative, I would defer to
you at this juncture.
303
Mr. Calvert. Thank you, Mr. Chairman.
As I stated in my opening statement, I am supportive of Class
I and Class II gaming in the State of California. And in my mind's
eye, that is not the issue today, as far as it relates to California.
It is the issue of Class III gaming that is presently taking place
in California, which, as you know, we have no law in California
that allows Class III gaming.
There are several reservations that have slot machines in San
Diego County, I believe all of those operations are in San Diego
County, approximately 700 slot machines. And as I understand the
limits of your responsibilities in the — as far as your regulatory lim-
itations, that you can only regulate Class I and Class II gaming;
is that correct, in California?
Mr. Hope. Well, most of those machine games are in Class II op-
erations. And insofar as we regulate Class II operations, we forbid
the operation of Class III gaming without a compact. TTie current
situation is — and this is not limited to San Diego County but, in
fact pandemic throughout the State of California — that the tribes
have taken the position that the act includes "electronic devices" as
bingo or pull-tabs.
They have sued us to prevent our enforcing the Act. And we have
won in court, in a 25-page opinion by the judge in the district
court. And they have appealed. And as part of the appeal, they re-
quested that the Court of Appeals grant them a stay, pending the
appeal, and that was granted by the Court about two weeks ago.
It is very difficult to marshal the forces of the U.S. Attorneys and
to convince them that it is a useful expenditure of their money to
prosecute these machine games at a time when some of the Califor-
nia tribes have sued us over the machine games. TTiree of those
tribes are from California and have a "stay" against our enforcing
the law. Coupled with this, is the possibility that these may become
legal by another decision in California by Judge Burrell, which is
being appealed by the State on the question of whether or not the
State is required to negotiate for this form of gaming. So it is the
courts that are slowing us down, at this point.
Mr. Calvert. The point that I am trying to arrive at in the in-
terim, while this stay is in effect, is there any regulation at all on
those slot machines?
Mr. Hope. The tribes
Mr. Calvert. Since that is Class III gaming?
Mr. Hope. The tribes consider them to be Class II and are regu-
lating them as though they were Class II gaming.
Mr. Calvert. So they are self-enforcing their own machines?
Are you involved in regulating the — let me ask this question
Mr. Hope. No, we are not involved in regulating machine games.
Mr. Calvert. Do you know what the source of money, where the
source of money came from to acquire those machines?
Mr. Hope. My understanding is generally that they came from
the profits of the other Class II operations.
Mr. Calvert. But again, that is from listening to those individ-
uals who are operating the casino themselves as a Class II casino,
the Indian tribe itself?
Mr. Hope. Yes.
304
Mr. Calvert. The revenue, then, there is no trace or no track on
that revenue that is being generated by those slot machines, at the
present time, because there is no compact with the State of Cahfor-
nia?
Mr. Hope. We do not regulate them, that is correct. And I don't
think it is anyone else's jurisdiction other than the tribes to regu-
late, I don't think there is a claim of jurisdiction elsewhere.
Michael, would you
STATEMENT OF MICHAEL COX
Mr. Cox. My name is Michael Cox, I am the Greneral Counsel to
the National Indian Gaming Commission. The way the Commission
regulates the revenues would be through the review and approval
of the management contracts the tribes may have entered into with
their management company which would include the operation of
their bingo games and those machines. So the Commission, in some
instances, has called in some of the contracts in California for re-
view of those contracts, and also to conduct background investiga-
tions on those persons that have a financial interest in the con-
tract.
So the Commission does have the capability and is going to be
looking at the source of and where the revenues are going, and how
they are being used. That is part of the Commission's responsibility
under our management contract review and also the ordinance re-
view, tribal — Indian tribes have to have tribal gaming ordinances
which are approved by the Commission. And one of the require-
ments of those ordinances, is the tribes have done annually an
independent audit of their gaming revenues, and that has to be
submitted to the Commission.
Mr. Calvert. I understand, at the present time, we do not know
what the source of funds were for those slot machines nor do we
know where those dollars are going to from the slot machines; is
that accurate to say?
Mr. Cox. At the present time, we do not know where — how the
revenues are being used or where the tribes obtained the money to
acquire the machines. In some cases, as the Chairman pointed out,
they were through the revenues from their bingo operations. In
other cases, they are leased from leasing companies who come into
the State of California and who share the profits with the tribe,
and those monies are leaving the State, going into the pocket of
those vendors.
Ms. McKeag. Excuse me, if I could just add to that, Mr. Calvert,
that does not mean that we will not be able to know. As indicated
in our testimony, we became operational on February 22nd. There-
fore, only recently have we had review management contracts.
Before February 22, 23 did not have authority to review audits
or call in and review existing management contracts where there
were questionable operations or use of the funds or the source of
the funds. In addition, our field staff could not go out and collect
that kind of information. We do now, and we intend to do our job.
Mr. Calvert. Let me ask a — I don't want to ask speculative
questions, but we have heard a lot of that today, so I will carry
that on. The stay that is in place now, we have a case in California,
you mentioned earlier, Mr. Hope, which may allow Class III gam-
305
ing to take place in California. And at the present time, there isn't
a compact with California, obviously, because we don't allow Class
III gaming in the State of California.
We have 94, I believe is it 94 federally recognized Indian tribes
in California. I think it is also accurate to say that many legitimate
casino operators, such as Caesars World, are coming into California
looking for management agreements to operate on tribe property,
based upon the fact, I think, that they want to operate Class III
gaming, not Class I and Class II gaming.
Mr. Hope. I am sure that they have negotiated these agreements
in anticipation that Class III gaming would become legal. I know
that they would never risk losing their Nevada licenses by operat-
ing in a gray area in some other State.
Mr. Calvert. So in anticipation that Class III gaming will come
to California, many legitimate operators from Nevada and else-
where are coming into California looking for management agree-
ments?
Mr. Hope. The Agua Caliente Agreement, to which you referred,
has not been submitted to us yet. They have not finished their
agreement. But my understanding is that it provides only for Class
II and specifically for bingo and pull tabs, although they expect
that if Class III becomes legal that they will manage that also.
The casino in California is a word that should not be used syn-
onjrmously with Class III. There are a number of compacts in the
State of California for Class III gaming, but that is only for off-
track betting, at the present time. They are called casinos by a lot
of people.
When you heard testimony earlier today about some number of
casinos operating, that would include the five California off-track
betting operations as casinos. "Casino" is generally used as any-
thing other than Class II.
The compact with the State, whether or not there is one in Cali-
fornia, probably will have to do with the lottery definition in Cali-
fornia, as to who is allowed to do what.
Mr. Calvert. The concern that I have here is that you have a
relatively small stafi", obviously your jurisdiction is a Class I, Class
II gaming?
Mr. Hope. Yes.
Mr. Calvert. California could conceivably be the largest gam-
bling State in the United States, certainly Las Vegas accounts for
the majority of all gambling dollars expended in this country.
There is tremendous, as you know, tremendous interest in locating
casinos in California.
Mr. Hope. Yes.
Mr. Calvert. Do you believe, does it matter whether it was In-
dian reservations or legitimate casino operations that are presently
located in Nevada? If you had 100 casinos in Nevada spread all
over the place, do you believe that presently with your staff, with
reasonable changes within the Indian Gaming Regulation Act that
is being proposed, that we could monitor and make sure that crime
S5aidicates are not involved in California?
Mr. Hope. Yes. Not through my staff, but under the Act. If Class
III gaming were allowed, there would be a compact with the tribe,
among the tribes in the State of California, which would call for
306
regulation by the agency that the tribe and the State agreed upon,
whether that was the State PoUce or, in some cases, tribal police
or some combination or some new entity.
California recently tried to create a gaming commission through
its legislature, which I understand has not yet been passed. It
failed once and is up again. There would be some sort of vehicle
within the State which would be financed most likely from the rev-
enues of these casinos, so that it would not be a drain on the re-
sources of the State of California, and would, in fact, probably pro-
vide jobs and revenue and a tax base for the State.
To say, as has been said before, that Indians don't pay taxes, is
simply wrong. The tribe does not pay taxes on some income. But
when that money is distributed to tribal members, that gaming in-
come is taxed the same way as anyone else.
It is very similar to a charity, a 501 (C)(3). The charity does not
pay taxes, but its employees do. And the tribe in Connecticut, you
will hear on the next panel, provide a tremendous tax base for the
State of Connecticut.
Mr. Calvert. I guess the concern is that if we don't amend the
Indian Gaming Regulation Act and the courts decide the Class III
gaming could come to California, which is conceivable, then the
concern at that point is going to be regulating gambling in Califor-
nia, large-scale gambling. And I just want to hear from you that
you are comfortable, and from the BIA's opinion, that they are com-
fortable that that type of major gambling, gaming in California
could be regulated and make sure that organized crime does not
enter the State of California.
Mr. Hope. I am sure that California and the tribes can come up
with an adequate system, yes.
Mr. Calvert. If I could continue.
There was one question that I asked the last panel, and I would
like to ask this panel. It is common knowledge that Class III gam-
ing is being conducted today, of course, as I mentioned earlier, on
many California, New Mexico, and Washington State Indian res-
ervations, without a tribal-state compact, including electronic
games of chance, video poker, slot machines, and video blackjack.
Is it not a violation of State and Federal law to conduct such gam-
ing without a compact, assuming the States can compact the games
in the first place. That is being a little redundant, I am asking that
again.
Mr. Hope. I think most of the Washington State tribes have com-
pacts. I know there are one or two that do not in the Eastern side,
but there are many compacts in place.
I would like my General Counsel, though, to answer this ques-
tion, if it is all right?
Mr. Cox. It is a violation of Federal law, it is certainly a viola-
tion of the Indian Gaming Regulatory Act to operate electronic
games without a tribal-state compact, and it is also a violation of
another Federal law, the Johnson Act, which prohibits gambling
devices in Indian country.
Again, as has been pointed out, some of the tribes argue that cer-
tain kinds of games, they believe, fall within Class II gaming. The
Commission rejected that, and as we have mentioned, we are in
307
court with the tribes on that, and we have been enjoined from con-
ducting any enforcement with respect to those kinds of games.
With respect to other kinds of games, which clearly — machine
games, which clearly fall within Class III, the recent decision by
Judge Burrell in Sacramento certainly is going to cause the United
States attorneys in California, who have ultimately the discretion
to decide what to do about the gambling in the State by the tribes,
they have to consider that decision. The judge has indicated that
California does not prohibit gambling devices as a matter of public
policy, believing that certain types of gambling equipment used as
part of the State lottery are similar, if not identical, to the types
of electronic games the tribes have requested the State to negotiate
a compact for. That kind of a decision certainly requires the United
States attorneys to determine whether their resources are best
used on prosecuting or seizing devices which may later turn out to
be the subject of tribal-state compacts.
It is a difficult kind of complex problem when you have courts
that have ruled that a State is obligated to negotiate over that type
of gambling while, at the same time, it is certainly not legal to op-
erate with those machines while you are attempting to get a com-
pact.
Mr. Abercrombie. Does that satisfy the question?
Mr. Calvert. Yes, Mr. Chairman, thank you.
Mr. Abercrombie. I have nothing further at this point, then, for
the panel other than to say thank you very much, and to indicate
that I don't want to gamble on the endurance level of my kidneys
any longer, so I will declare a five-minute recess before our fourth
and final panel comes up. I trust that everyone will take advantage
of it.
[Recess.]
PANEL CONSISTING OF TIMOTHY WAPATO, EXECUTIVE DIREC-
TOR, NATIONAL INDIAN GAMING ASSOCIATION; RICHARD
JAMES ELROY, RETIRED SPECIAL AGENT, FEDERAL BUREAU
OF INVESTIGATION; G. MICHAEL BROWN, PRESIDENT AND
CEO, MASHANTUCKET PEQUOT NATION'S FOXWOODS CA-
SINO AND HIGH STAKES BINGO, LEDYARD, CT, ACCOM-
PANIED BY LT. COL. ROBERT ROOT, CONNECTICUT STATE
POLICE; F. WILLIAM JOHNSON, CEO, MYSTIC LAKE CASINO,
SHAKOPEE SIOUX TRIBE, PRIOR LAKE, MN ACCOMPANIED
BY POLICE CHIEF DICK POWELL, CITY OF PRIOR LAKE PO-
LICE DEPARTMENT
Mr. Abercrombie. As is often the case with an issue that has
high visibility and interest when we have a panel — ^we have several
panels, and, unfortunately, it takes some time to get to them.
I want to thank the members of our fourth panel, Mr. Elroy, Mr.
Wapato, Mr. Brown, and Mr. Root, Johnson, and Powell for their
patience, and I genuinely mean that. Aloha, and welcome to all of
you, we are anxious to hear what you have to say.
We will move right to it with Mr. Elroy, who is a retired special
agent of the Federal Bureau of Investigation.
Mr. Brown. He is not here, sir.
Mr. Abercrombie. Oh, he is not here?
Mr. Brown. He is here, but I think he is in the men's room.
308
Mr. Abercrombie. Is his testimony submitted?
Mr. Brown. I don't know.
STATEMENT OF TIMOTHY WAPATO
Mr. Abercrombie. Mr. Wapato?
I may have mispronounced your name.
It is Wapato, is that correct?
Mr. Wapato. That is correct.
Mr. Abercrombie. I beg your pardon.
Mr. Wapato. Mr. Chairman, my name is Tim Wapato. Before I
get into my testimony I have some people I would like to introduce.
They have been sitting very patiently in the audience also.
Mr. Abercrombie. Please.
Mr. Wapato. Last month, the Mille Lacs Band of Ojibway in
northern Minnesota dedicated the first permanent primary and
secondary school buildings on its reservation. These schools were
not built with Federal tax dollars or with State funds, but were fi-
nanced entirely by revenues generated from the tribe's own casino.
I would like to welcome and introduce the Mille Lacs chair-
person, Marge Anderson, along with the delegation of tribal elders
and five young members from the Nay-Ah-Shing school, in the first
student class. And we are very honored to have them here. I won-
der
Mr. Abercrombie. Could you folks kindly stand so that we can
recognize you.
Are they out in the hallway now?
They probably had the same kind of endurance problem I had.
Mr. Wapato. Mr. Chairman, we had four elders accompany us to
learn a little bit what passes for process in this hearing, and
Mr. Abercrombie. As you can tell from the previous panel, free
speech reigns.
Mr. Wapato. And I appreciate that.
Mr. Abercrombie. No matter how idiotic.
Mr. Wapato. Like they say, that is what made America great.
Mr. Chairman, my name is Tim Wapato, I am the Executive Di-
rector of the National Indian Gaming Association. As you may be
aware, prior to serving as the Executive Director with the National
Indian Gaming Association, I spent some time as the Commissioner
at the Administration for Native Americans, which is charged with
the responsibility for developing and providing grants to Indian
tribes for economic development.
I also spent a considerable amount of time as a police officer. I
retired from the Los Angeles Police Department as a lieutenant of
detectives. During that time, I served as a lieutenant of a special
investigation team investigating robberies, homicides, vice and nar-
cotics. During that time, I had been loaned to the Bureau of Indian
Affairs to assist in setting up a poUce department on the Colville
Confederated Tribes Reservation, which is also my tribe in the
State of Washington.
I have also worked as a consultant in the gaming, Indian gaming
and have worked with the Sycuan Tribe of California and its gam-
ing Commission to bring the police department and the gaming se-
curity and surveillance into compliance with the Indian Gaming
Regulatory Act. I mention that because I believe with my varied
309
background I have some experience and knowledge to provide the
subcommittee with an overview of law enforcement, of regulation,
and security status in the Indian gaming industry.
I can tell you that no other economic activity in this country has
more layers of regulation specifically devoted to protecting against
the influence of organized crime. NIGA, as you may be aware, is
an association of Indian tribes, it is a nonprofit organization work-
ing to protect tribal sovereignty and to promote tribal economic de-
velopment through gaming enterprises.
It also serves to provide technical assistance to its member
tribes, including law enforcement and security. Selected officers,
and we have — our Chairman is in the audience, Richard G. Hill is
Chairman from the Oneida Tribe. Our Vice Chairman is Dan Tuck-
er who is from California, Sycuan Tribe. Jacob Viarrial was in the
audience, I don't know if he is still here, and Nathan Small.
Mr. Chairman, in 1988, against the wishes of tribes across the
Nation, and the non-Indian gaming industry with active support of
State government officials fought for and secured the enactment of
the Indian Gaming Regulatory Act, IGRA. This act not only did not
authorize or permit Indian tribes to engage in gaming, but it, in
fact, limited tribal sovereignty in this area as confirmed in the Su-
preme Court's decision in the Cabazon case.
Despite this loss of tribal sovereignty and control over economic
operations, tribes were successful in making gaming a significant
economic development tool. While Indian gaming amounts to only
3 percent, 3 to 4 percent of the total gaming proceeds in the United
States, that 3 to 4 percent by law must be dedicated to govern-
mental activities and governmental services.
The tribes use them, as you have heard, for such things as the
school that I just spoke about, at Mille Lacs, but they also build
sewer and water systems, roads, medical facilities, senior citizen fa-
cilities, and similar services. Even with this documented beneficial
impact of Indian gaming on Indian and non-Indian people, we once
again are faced with the threat from a small number of individuals,
most of whom you heard here today, on the Federal and State
level, in concert with representatives of the non-Indian gaming in-
dustry, to further erode tribal sovereignty by anti-Indian amend-
ments to IGRA.
These individuals who you have heard have made allegations
that Indian gaming is largely unregulated and is crime ridden. As
you heard from a number of agencies in the previous panels, there
are four or five areas of regulation that exist in Indian gaming.
The first is the Indian tribe itself, and the Indian tribe as a sov-
ereign has the right and the duty and the responsibility to protect
their membership. I would like to provide just a very brief outline
of those levels of regulation that exist.
Mr. Abercrombie. Mr. Wapato, your testimony will be entered
in full. I have gone over it, I think it is quite detailed and to the
point.
Perhaps you could summarize for us.
Mr. Wapato. We have the four levels of regulation, the tribal
regulation, you are going to hear some people on this panel, the
specifics that goes into. You have the Bureau of Indian Affairs that
is responsible for review and the approval of contracts; you have
310
the National Indian Gaming Commission who has testified, that
also has the review and the oversight; you have the Federal Bu-
reau of Investigation; you have the U.S. Attorney. All of these lev-
els of enforcement and regulation come into play on an Indian res-
ervation and an Indian casino. And I think that to the contrary of
being unregulated or nonregulated, there are layer upon layer of
regulatory authorities that are and must be exercised in Indian
gaming.
I think one of the things that must be pointed out, the list of sup-
posed infiltration by organized crime of 22 instances documented
by news media and news clips are in the most part, for the large
part, pre-IGRA, or passage of the law in 1988. And that we will
provide to this committee in the time that the record is open, docu-
mentation of what each and every one of those so-called allegations
is. I think one of the most notable cases is the Rincon case which
several people spoke to.
A specific response was not given to a question that was asked
of the gentleman from the FBI. That case was brought to the atten-
tion of the Federal Bureau of Investigation by the Indian tribe it-
self.
The overture in that case was made to an individual tribal mem-
ber, not to the tribal government. The tribal government identified
that, they went to the Federal authorities on several occasions be-
fore they were successful in having the Federal authorities proceed
in a prosecution.
There is another alleged incident of organized crime, where
somebody was supposedly hired as a hit man on the Cabazon Res-
ervation. In that case, there was, in fact, an overture made, a per-
son was supposedly hired to be a hit man, a person was later con-
victed, but it had nothing to do with Indian gaming. That was a
private domestic dispute, where a hit man was hired to supposedly
hit somebody. That person was convicted, served his time, and is
now back out. But it had nothing to do with Indian ganiing. But
we will provide the documentation on that for this committee lest
this committee take at face value the list of things that are on the
list of 22.
[The information follows:]
311
.*A^-.
October 14, 1993
The Honorable Bill Richardson
Chairman
Subcommittee on Native American Affairs
Committee on Natural Resources
1522 Longworth Building
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
On October 5, 1993, Representative Robert Torricelli appeared before
the Subcommittee on Native American Affairs to introduce and laud Donald
Tnjmp. In his prepared statement, Representative Torricelli slandered and de-
famed the entire Indian gaming industry by alleging widespread fraud, abuse
and organized crime infiltration. Despite the testimony of the United States
Department of Justice that
the belief held by some that Indian gaming operations are rife with
serious criminality is not established by the data currently available,
and that
The Department of Justice believes that to date there has not been a
widespread or successful effort by organized crime to infiltrate Indian
gaming operations,
Mr. Torricelli attached to his statement a list of newspaper reports that he de-
scribed as "22 specific examples of organized crime infiltration or cornjption in
tribal gaming that have been reported in the media."
Because three of these "examples" referred to the Cabazon Band of
Mission Indians, we feel obligated to respond to Representative Torricelli's
statement, and repectfully request that this letter be included as part of the
official hearing record.
First, the statement alleges that the "Cabazon tribe (sic) in California
hired a member of a local crime syndicate to run its casino." This statement is
^i^^t^^T^aJ^d^^t^^MhWt^TMh!^
84-245 INDIO SPRINGS DRIVE □ INDIO, CALIFORNIA 92201-3405 □ (619) 342-2593 o FAX (619) 347-7880
312
false. In 1980, when the Cabazon Band originally opened its first card room, it
sought recommendations for a manager from a variety of sources. Leo
Durocher, the famous baseball player and manager, recommended Rocco
Zangari to the Cabazon Band and Mr. Zangari was hired for that position. Less
than a year later, in 1981, newspaper stories appeared alleging that Mr.
Zangari's brother, a prominent Palm Springs restaurateur, had some connec-
tion with persons reported to be associated with organized crime in
Philadelphia. As the result of these allegations, Mr. Zangari was summarily
fired by the Cabazon Band and has had nothing to do with the Cabazon Band
or its gaming activities for more than 12 years.
Next, the Torricelli statement claims that "a tribal official who accused the
manager of skimming profits later was forced out of office and found dead two
months later. While the case has not been solved, investigators believe that the
murder was mob related." Once again, Mr. Torricelli's sensationalized account
bears little resemblance to the truth. Fred Alvarez, the tribal member referred to,
served one four-year term on the Cabazon Business Committee. However, in
June, 1981, Mr. Alvarez was defeated for reelection (not "forced out of office")
because of his increasingly erratic behavior. This behavior included seeking
tribal permission to grow marijuana on his tribal allotment and his increasing
association with local motorcycle gangs. A month later, Mr. Alvarez and two
non-Indian Companions were shot to death in his home some distance from the
Cabazon Reservation. Despite the full cooperation of the Cabazon Band, the
murders have never been solved and we are unaware of any evidence that they
were either "mob-related" or in any way related to his tribal affiliation.
Finally, Mr. Torricelli makes reference to the fact that in 1985, a non-tribal
employee pleaded guilty and was sentenced to four years in prison for attempt-
ing to hire a person to murder the people supplying drugs to his girifriend. This
incident, while extremely unfortunate, was a personal matter and had nothing
whatsoever to do with the Cabazon Band or its gaming activities. As a result,
and contrary to Mr. Torricelli's allegations, this incident is not "an example of or-
ganized crime infiltration or corruption in tribal gaming" and further demon-
strates the lack of substance to the Torricelli statement.
In summary, the Cabazon Band is proud of its gaming activities. They
are well-run, honest, heavily regulated and have provided the tribe with a much-
needed source of tribal revenues and employment. Virtually all of the progress
we have made over the last thirteen years is directly attributable to our tribal
gaming enterprise.
Finally, we would remind the Subcommittee and Mr. Torricelli that the
Cabazon Band fought for seven years, all the way to the United States
Supreme Court, to establish the right of Indian tribes to conduct gaming activi-
ties on their reservations. Throughout that long fight, the State of California
never once alleged any organized crime infiltration on the Cabazon
Reservation.
Not only were there no such allegations in the Cabazon litigation, the
Ninth Circuit Court of Appeals specifically noted that while keeping criminals out
of Indian gaming was a legitimate concern, "there is no evidence whatsoever
that organized crime exists on these [Cabazon and Morongo] Indian reserva-
tions." Cabazon Band of Mission Indians v. Countv of Riverside , 783 F.2d 900,
904 (9th Cir, 1986). The United States Supreme Court reached the same con-
:!^^ti^^iM!dJ^j^^:t^^^i^Mt^^T^!d::)^
313
elusion: "California does not allege any present criminal involvement in the
Cabazon or Morongo enterprises, and the Ninth Circuit discerned none."
California v. Cabazon Band of Mission Indians. 480 U.S. 202. 221 (1987) .
In light of these facts and the recent Justice Department testimony, Mr.
Torricelli's statement should be seen for what it is: a shameless attempt by the
sponsor of the "Donald Trump Protection Act" to eliminate competition and to
deprive tribal governments of the only economic development tool ever to suc-
ceed in creating tribal self-sufficiency.
Sincerely,
John A. James (y
Tribal Chairperson
JAJ/saw
y^^^/my^^^!:y^!^M^/md^M^MY/M^
314
Mr. Wapato. I would also like to indicate, I think it is very clear
and I think it came out very quickly, Mr. Trump cut to the chase.
The real issue here is economic competition. It is not organized
crime. It is not infiltration.
There has been only one documented case of organized crime,
and that one resulted in a successful prosecution. It is very clear
that what is being proposed would restrict Indian gaming, it would
propose to treat Indian gaming as New Jersey gaming, commercial
gaming.
Indian gaming is not commercial gaming, it is governmental
gaming. If it is to be equated with any gaming it has to be equated
with a State lottery, 40 States of which now have State lottery.
It is a revenue-producing mechanism for Indian tribes as opposed
to a profit-making enterprise by Indian tribes. There is a big dif-
ference between revenue production and profit.
Nobody on this committee or elsewhere suggests that State lot-
teries should be taxed because they are governmental. And it is the
same thing that Indian gaming is, I think it is very clear
Mr. Abercrombie. Mr. Wapato
Mr. Wapato. May I finish my thought?
Mr. Abercrombie. Very well.
Mr. Wapato. The organized crime allegations that organized
crime is going to lead to the destruction of the culture on Indian
reservations, that tribes will be victimized by organized crime are
the furthest from the truth. Marge Anderson and the people that
built the school in Mille Lacs with their gaming proceeds, have at
the heart of their matter, the utmost concern for the tribal mem-
bers and for the future.
If we will be victimized by anjrthing, we will be victimized if the
Donald Trump Protection Act is passed.
Thank you.
[Prepared statement of Mr. Wapato follows:!
315
STATEMENT
OF
TIMOTHY WAPATO
EXECxrrivE director
NATIONAL INDIAN GAMING ASSOCIATION
BEFORE
THE
HOUSE NATURAL RESOURCES COMMITTEE
SXreCOMMITTEE ON NATIVE AMERICAN AFFAIRS
CONCERNING
THE
INDIAN GAMING REGULATORY ACT
ON
OCTOBER 5, 1993
316
STATEMENT OF TIMOTHY WAPATO
EXECUTIVE DIRECTOR
NATIONAL INDIAN GAMING ASSOCIATION
BEFORE THE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
COMMITTEE ON NATURAL RESOtTOCES
U.S. HOUSE OF REPRESENTATIVES
October 5, 1993
Mr. Chairman, my name is Tim Wapato, Executive Director of
the National Indian Gaming Association. I appreciate the
opportunity to appear before this Subcommittee to testify on the
issue of law enforcement regarding Indian gaming.
As you may be aware, prior to serving as the Executive
Director of the National Indian Gaming Association, I have worked
in various high-level positions with the Los Angeles Police
Department, including Lieutenant-in-Charge of a special
investigative team, investigating robbery, homicide, vice, and
narcotics. I retired in 1979 after 21 years of service. LAPD
loaned my services to the Colville Tribe of Washington to assist
them in establishing its police department in Nespelem,
Washington. Recently, I have worked with the Sycuan Tribe of
California and its Gaming Commission to bring its police
department and gaming security into compliance with the Indian
Gaming Regulatory Act.
I mention all of this because I believe that my past
experience in law enforcement and my recent experience in Indian
gaming gives me the background and knowledge to provide the
subcommittee with a professional opinion of the Indian gaming
industry's law enforcement and security status. I can tell you
that no other economic activity in this country has more layers
of regulation specifically devoted to protecting against the
influence of organized crime.
NIGA is a nonprofit organization working to protect tribal
sovereignty and to promote tribal economic development through
gaming enterprises. It also serves to provide technical
assistance to its member tribes on gaming issues, including law
enforcement and security. The elected officers are Richard G.
Hill, Chairman; Daniel Tucker, Vice Chairman; Jacob Viarrial,
Secretary; and Nathan Small, Treasurer. I am pleased to be here
on behalf of our membership which represents 95 sovereign
governments .
Mr. Chairman, in 1988, against the wishes of tribes across
the nation, the non-Indian gaming industry with the active
support of state government officials fought for, and secured,
the enactment of the Indian Gaming Regulatory Act. This Act not
only did not authorize or permit Indian tribes to engage in
gaming, but, in fact, limited tribal sovereignty in this area as
317
confirmed in the Supreme Court's decision in the Cabazon case.
Despite this loss in tribal sovereignty and control over
economic operations, tribes were successful in making gaming a
significant economic development tool. While Indian gaming is
only about 3% of the United States gaming market, net tribal
proceeds from such activity have been used for tribal government
services such as sewer and water systems, schools, roads,
medical facilities, and similar services. Even with the
documented beneficial impact of Indian gaming on Indian and
non-Indian people, we once again are faced with the threat from a
small nximber of individuals on the Federal and state level, in
concert with representatives of the non-Indian gaming industry,
to further erode tribal sovereignty by anti-Indian amendments to
IGRA.
These individuals have asserted, but never supported with
facts, that the Indian gaming industry is largely unregulated,
and is crime ridden. I am here to discuss the tribal gaming
regulatory mechanisms currently in force under the 1988 Indian
Gaming Regulatory Act. I would like to emphasize two points.
First, I would like to point out the sovereign right and duty of
Indian tribes to protect their membership. Second, I will
provide an outline of the levels of enforcement and regulations
by which tribal gaming operations must abide. I believe that you
will see that not only is the Indian gaming industry well run and
well regulated, but that it is more heavily regulated and more
closely watched than e'ither the state or charitable gaming
industries combined.
I. TRIBAL SOVEREIGNTY AMD THE PROTECTION OF TRIBAL MEMBERS
The significance of the powers held by federally recognized
tribes was set out in the 1831 Supreme Court case, Cherokee
Nation v. Georgia. In that case. Chief Justice Marshall described
the status of Native American tribes as "...domestic
dependent nations...". This status gives rise to the existence
of a government-to-government relationship between the tribal
governments of American Indians and the federal government of the
United States. This relationship has been recognized at the
conception of the United States, and continues to be recognized
today. Tribes are recognized as sovereign entities, with powers
of self-government over their members and over activities taking
place within their territory. Included within these powers is the
right to initiate economic development programs, like gaming
operations, to protect their membership from poverty and economic
devastation.
In California v. Cabazon (1987), the Supreme Court upheld
the right of tribes as sovereign nations to conduct gaming on
Indian lands free of state control as long as similar gaming was
permitted by the state outside the reservation for any purpose.
This sovereignty was further recognized - while at the same time
infringed upon - by the Indian Gaming Regulatory Act passed by
84-760 O - 94 - 1 1
318
Congress in 1988. The Act affirms that tribes has the power to
conduct gaining on Indian lands but it gives states the ability to
regulate the gaming through the signing of tribal/state compacts.
Within the scope of IGRA, tribes have the opportunity and
right to generate revenue for tribal government operations and
programs for gaming operations, just as state governments have
the right to conduct state lotteries to generate revenue for
their operations and programs. Proposed amendments to IGRA from
anti-Indian gaming forces would further reduce tribal powers of
self-government and proposed amendments would lessen and cheapen
the government-to-government relationship between tribes and the
Federal government .
II. Regulatory Powers Governing the Inditui Gaming Industry
The Indian gaming industry is subject to regulation and
enforcement at four levels of government. The first and most
important, is the regulatory powers of the tribes themselves.
Tribal Government Regulation:
The tribes, as domestic sovereigns, adopt and enforce their
own laws, ordinances, policies and codes for gaming operations on
their lands. Under those regulatory schemes, tribes have
established their own gaming boards or commissions to enforce
gaming laws; developed and directed tribal police departments;
and employed their own surveillance and security systems for
their casinos and other gaming facilities. Training for key
tribal gaming employees is contracted or provided through college
courses. State-of-the-art security cameras, surveilleince,
controls, cuinual outside audits, and accounting systems are
utilized by the tribes.
Many of the regulatory requirements adopted by the tribes as
a part of their own code are memdated by IGRA itself. And because
gcuning tribes rely heavily upon gaming revenues, they
have an added incentive to keep operations running smoothly and
crime free. The Sycuan tribe of California, for instance, has
ordinances imposing such thorough application process, that the
application for employment is 16 pages long. [See Attached] As
noted, the tribal regulatory system includes extensive
surveillance and security measures. For instance, in fiscal year
1993, the Oneida Tribe of Wisconsin spent $6,166,451 on its
surveillance and security system, with another $2,000,000 for
security equipment. In addition, under the IGRA, all key
employees are subject to extensive background checks, including
fingerprinting, prior employment and criminal record checks.
Please note, most tribes have chosen to fingerprint 100% of their
personnel .
319
Tribal/state Compacts:
The second level of law enforcement and regulation of Indian
Class III gaining is imposed through the Compact between a Tribe
and a State. Because of IGRA requirements, Class III Indian
gaming may only be conducted under a compact negotiated between
the tribe and the state. Through these contracts, states are
able to impose a considerable portion of their own regulatory
requirements on Indian gaming. These provisions may include the
allocation of criminal and civil jurisdiction over such
operations between the tribe and the state; imposition of state
licensing and permitting requirements; state regulatory and
inspection; state employment requirements; and cost-sharing to
defray regulatory costs. Such state regulatory oversight is
often an addition to stringent tribal regulation imposed by
tribal gaming authorities. In Arizona, for example, which has
thirteen compacts approved by the Secretary of the Interior, the
compacts allow the state extensive law enforcement regulatory
powers over tribes. In Arizona, the state must, among other
things, certify all non-tribal applicants for employment, all
providers of gaming services, all management contractors and/or
financiers, and all individuals or entities which have any
connection to a gaming facility. The standards for state
certification are extremely rigorous, including thirteen separate
criteria specifically designed to root out organized crime
affiliations or connections. As long as the states bargain in
good faith, they are able, through the compacting process, to
impose significant parts of their own laws upon Indian gaming.
You can see, Mr. Chairman, why the tribes have always asserted
that IGRA was an erosion of tribal sovereignty.
National Indian Gaming Commission:
The third level of regulation over Indian gaming is through
the National Indian Gaming Commission. The Commission, in
carrying out its regulatory responsibilities under IGRA, oversees
Class II gaming and, to some extent, Class III gaming and
implements its duties through regional regulators and management
contractor monitoring. The regulatory requirements of IGRA which
the Commission must implement, particularly over Class II gaming,
are extensive. They include annual outside audits on all gaming
activities including contracts for supplies, services, and
concessions; requirements for provisions to protect the
environment and public health and safety; extensive requirements
for background investigations of key officials and employees
involved in gaming operations and the oversight of such officials
and employees on a continuing basis; and licensing requirements.
The tribes are also regulated as to how the net revenues
from gaming operations may be spent. Net revenues may not be
spent for any other purpose than to fund tribal governmental
operations or programs; to provide for the general welfare of the
tribe and its members; to promote tribal economic development; to
donate to charitable organizations; or to fund local government
agencies .
320
Even where tribes are eligible for self-regulation under a
Class II operation, they are still subject to strict scrutiny by
the Commission. Before being granted that status, they must
demonstrate that they are conducting their activities in a manner
which has resulted in an effective and honest accounting of all
revenues; a reputation for safe, fair, and honest operations; and
evidence that their operation has been generally free of criminal
or dishonest activity. They must also show that they have
adopted and are implementing adequate systems for the
investigation, licensing, and monitoring of all employees of the
operation, as well as the investigation, enforcement and
prosecution of violations of its gaming ordinances and
regulations. They also must show that they have conducted the
operations on a fiscally and economically sound basis. Even
under self -regulation, the tribal audit, employment checks, and
other regulations remain subject to Commission oversight.
Federal Entitles:
The fourth level of regulation of Indian gaming comes from
several other Federal agencies. The FBI continues to have its
duty and authority to investigate crimes on Indian reservations
in those states which do not have criminal jurisdiction over
Indian reservation under P.L. 83-280. These include the
responsibility to investigate general crimes in non-280 states
and, in all states, criminal violations of gaming laws under
IGRA. The Bureau of Indian Affairs also has the capability and
authority to investigate crimes on Indian reservations and
maintains a force of police officers on many Indian reservations
and in regional offices. In addition, the BIA has specific
regulatory responsibilities under IGRA, such as approval of
Tribal-State Compacts. The Internal Revenue Service also plays a
role in applying Federal income and other tax laws to tribal
gaming operations. Finally, the Justice Department, acting in
most cases through the several offices of the U. S. Attorney, has
the responsibility for the enforcement and prosecution of crimes
on Indian reservations, including general and specific crimes
arising out of Indian gaming.
Mr. Chairman, it is the position of the National Indian
Gaming Association, that the Indian gaming industry is well, if
not overly, regulated through these four levels of government.
Allegations coming forth from individuals asserting that Indian
casinos are "fronts" for organized crime are simply a smoke-
screen to cover their real aim - which is to eliminate Indian
gaming as competition to commercial non-Indian gaming. Such
opposition is clearly economic racism and Congress must not allow
itself to be used to implement the racist agenda of a few greedy
commercial gaming tycoons. We urge you to protect our remaining
tribal sovereignty in this area, and our economic well-being, by
strongly opposing the anti-Indian gaming cimendment to IGRA
emanating from those sources.
This completes my testimony, Mr. Chairman, and I am
available for any questions the Subcommittee members may have.
321
aij^i^^^!"
Sycuan ^ and of Mission Indians
AUTHORIZATION TO RELEASE INFORMATION
NAME:
Last First Middle
OTHER NAMES;
(Aka's, prior marriages, maiden names)
DATE OF BIRTH: SOCIAL SECURITY §
POSITION APPLYING FOR:
To Whom It May Concern:
I respectfully request and authorize you to permit the Sycuan Band
of Mission Indians, Sycuan Tribal Police and their agents to review
my credit record, juvenile or adult probation record, medical
record, military, academic, financial records and employment
record; including but not limited to personnel files, background
files, internal investigation files and training files. They are
also authorized to copy any material contained therein.
I hereby release you, your organization, or others from any
liability or damage which may result from furnishing the requested
information.
A photocopy or facsimile of this release form will be valid as an
original thereof, even though said copy does not contain an
original writing of my signature. The original of this form is
maintained at the Sycuan Human Resources Department and will be
made available upon request.
The information is to be used to assist the Sycuan Band of Mission
Indians in determining my fitness and qualifications for a position
of trust and responsibility.
This release will expire one year after the date signed.
Signature:
Date :
5459 DEHESA ROAD • EL CAJON, CALIFORNIA 92019 • (619) 445-0109/0118 • FAX (619) 445-1927
322
F.B.I. INFORMATION AND
CONSENT FOR DRUG TESTING
1. NAME: OTHER NAMES USED:
2. PRESENT STREET ADDRESS:
CITY: STATE: ZIP CODE:
3. DATE OF BIRTH: SEX:
4. PLACE OF BIRTH (CITY, STATE):
5. RACE: TRIBAL AFFILIATION/NUMBER:.
6. PREVIOUS ADDRESS:
7. DRIVER'S LICENSE: SOCIAL SECURITY:
8. HAVE YOU EVER BEEN ARRESTED OR CONVICTED OR ANY OFFENSE OTHER
THAN A MINOR TRAFFIC VIOLATION? YES NO
IF YOU HAVE ANSWERED YES TO QUESTION #8, FILL IN THE FOLLOWING
INFORMATION FOR EACH OFFENSE. (USE OTHER SIDE OF THIS PAGE IF
NECESSARY) .
DATE OFFENSE LOCATION DISPOSITION
(A) I, HEREBY AUTHORIZE THE SYCUAN BAND OF
MISSION INDIANS HUMAN RESOURCES DIRECTOR OR DESIGNEE TO SEEK
INFORMATION ABOUT ME FROM THE FEDERAL BUREAU OF INVESTIGATIONS OR
OTHER SUCH CLEARANCE AGENCIES, AND I GIVE THEM THE RIGHT TO ACCESS
ANY AND ALL OF MY FILES AND/OR RECORDS MAINTAINED BY THESE
AGENCIES.
(B) I,_ HEREBY AUTHORIZE AND GIVE MY CONSENT
TO BE GIVEN A DRUG TEST AT ANY TIME THE TRIBE DEEMS IT TO BE
NECESSARY. I AGREE TO BE TESTED BY THE DOCTOR APPOINTED BY THE
TRIBE AND I FURTHER AUTHORIZE THE DRUG TEST RESULTS TO BE
DISSEMINATED TO THE TRIBAL COUNCIL AND/OR IT'S DESIGNATES FOR
ADMINISTRATIVE USE AS THEY DEEM NECESSARY.
(C) I, FURTHER UNDERSTAND THAT SHOULD THESE
CLEARANCE CHECKS REVEAL ANY NEGATIVE INFORMATION AND/OR IF I DO NOT
CONSENT TO THE DRUG TESTING, I SHALL BE SUBJECT TO IMMEDIATE
DISMISSAL AS AN EMPLOYEE OF THE TRIBE AND IT'S ENTERPRISES.
SIGNATURE: DATE:
323
PRIVACY ACT
In compliance with the Privacy Act of 1974, the following
information is provided:
Solicitation of the information on this form is authorized by 25
use. 2701 et seq. The purpose of the requested information is to
determine the eligibility of individuals to be employed in a gaming
operation. The information will be used by National Indian Gaming
Commission members and staff who have need for the information in
the performance of their official duties. The information may be
disclosed to appropriate federal. Tribal, State, local, or foreign
law enforcement and regulatory agencies when relevant to civil,
criminal or regulatory investigations or prosecutions or when
pursuant to a requirement by a tribe of National Indian Gaming
Commission in connection with hiring or firing of an employee, the
issuance or revocation of a gaming license, or investigations of
activities while associated with a tribe or a gaming operation.
Failure to consent to the disclosures indicated in this notice will
result in a tribe's being unable to hire you in a primary
management official or key employee position.
The disclosure of you Social Security Number(SSN) is voluntary.
However, failure to supply a SSN may result in errors in processing
your application.
Applicant name (first middle last) Please Print
Applicant Signature
Date
Witness name (first middle last) Please Print
Witness Signature
Date
324
$^m^^
Personal History Statement
Tht foUo'*->nfi 1
formouon is rtq
uejied of you for vtnficonon and contact purpose
1 Your Name (Ple»sepnm or tvpe) 1
Ust
Fnt Middle
Other ntmcs (including njcknamet) you hive ui«d or been known by:
2 Pleue list sour curreni residence address
Number Street
Clly
^
Zip Code
3 Pleau lilt your rcsidmcc telephone numbertt) at
which you can be conucied .
( )
( )
Hn you can be contacted
4 Birthdiie
: PltuofBmh
6 Cituenihip
7 Sex
Month
D.)
Yeir
Mile □ Female Q
8 Soaj] Secunr\ SumScr
(In Accordance wrth the Ttdenl Pnvtcy Ad of 1974, disclo«UR a vohjntiry. Tlw SSN wiJI be \aed for
identification purpoici to ensure IhAt proper ivcorda art obtained)
9 For ibe purpoies of identificaiion. please proMde the followmR 1
Height
Weight
Hair Color
Eye Color
%c»n, Uioot, or other distinguishing marks
All languages (spoken or wnnenj
Relatives and References
t
Dunng tht course of the background invejngonon. per tons whohtovyoti wiU b* aikdd to comment upon yotir tuitabttity for the position for
M^tch \-ou have applied hpuines will be confirmed to lob-relevani moflers
10 Please iuppl> the appropriate information in the spaces provided below Ifacalegory btMappbcsble, writcio"N/A.' 1
If li\inR.nameofvour
AJdrctt where pcnon can be oonadcd
flnclude Cttv. Suu and Zin Code)
Telephone aivrfiich
Deraoncanbe contacted
Father
OHome () Work () Other
OHome () Work () Other
Mother
OHoraeOWoAO Other
( JHome () Work () Other
FathcT'in-Liw
(IHotne () Work () Other
OHome OWoAO Other
Mothcr-UHLaw
OHane () Work () Other
OHome O Work O Other
Sfttue
( Wont. () Work () Other
OHoii»0 Work O Other
Fwrner Spous<<i)
OHotiK OWoikOOther
OHome OWorkOOllier
325
Personal History Statement
sKekfrves and References Continued
11. PiMW fiipply tlM appropritu infonniiion in tbe sp»
If livwB. nime of your
ce» provided below. If a category is not applicable, wntt l
Address where person can be c«citacled
(Include Citv. Stale and Zio Codel
n-N/A."
Telephone at which
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OHome OWofltOOlher
OHome OWorkOOther
Sl«p-liroUia(s) and atp-5ina<s)
OHome OWorVOOlher
OHoim OWorkOOther
OHome O Work O Other
OHome OWorkOOther
Other relatives with whom vou have a close personal relationship (iiKluduiK children) I
Relationship
OHome OWoikOOther
OHome OWorkOOther
OHome O Work O Other
OHome OWorkOOther
OHome O Work O Other
OHome OWorkOOther
OHome O Work O Other
OHome OWorkOOther
12. Below, please list those indiMdui
Is with whom you have resided during the Us 10 yean (list no infonnalion prior to your 15thbinhday). j
OHome () Week OOttKT
OHome OWorkOOther
OHome OWorttO Other
OHome OWotkO Other
OHome () Work () Other
OHome OWorkOOther
riHom, MWnAriOlher
OHome OWorkOOther
OHome OWorkOOther
326
Personal History Statement
.Rektives and References Continued
13 In the ipice below, plfcise lifl M feterenctt 3-5 tnd
cmploym Includt <m« pmoMi referoica for M£
Name
viduilj who hive knowledge ol you in) your quuaicMiom txciuoe reiiuvei aou lornio
h period ofrttidCTa lined in uction HU.
Addreuwtierepenoocmliecoouaed Telephone il which
(Include Citv.Suleind 7.10 Codel oenon c«n be conuaed
OHom. () Wo* () Other
OHomeOWofcO Olher
()Horne()WoA()Olher
OHomeOWoikOOllier
OHon^OWortiO Other
OHome {)Wo»k()Olher
OHome ( ) Worlc ( ) Olher
OHonK OWottcOOlher
OHome OWorkOOlher
OHotne () Work () Olher
liUC3tUHl
14. Indicale your cufTcru educjtion tchievemem level
n I possess 1 high school diploma from a U.S insunAion.
Q I passed the GEO. (General Mucauonal Developmenl) lea.
n 1 passed the California High School Profiaency Examinatioa
n I possess a two-year college dcpcc
Q 1 poaseB a four-year college or university depn
[~| I do not csmwaly have a high school diplonu or lU enuivalera, bu I plan to achieve one
When
How:
you in a learning environment wiU be coi«acl«d Armiewof youradiooliacordaoiay bemadeiooopiuaaknwithlhoaeconlactl.
Namt of School
Locanoo of School
(CilyASliU)
DauAncsdad
SdnolRcfaona
rTaaciMn,Coiaahn.e>c)
From
MonthTear
To
Month/Year
327
Personal History Statement
JXiCation : continued
16 Hive you ever been mspendtd or expelled from hi^'tc^ool or pofi-iecondiry ichooP (PoC-secondao' schools include two and four-ycir
colleges, umversriies. and business ind vocalional tchools • tny fomul education beyond the high school level )
If "yes," please explain {include school, date, and circumsunccs).
iJReridwjce,
!ndiwduob M'>io havt become acquainted wtihyou by reason of your re
backeound mvesngaliom
siding in differen
I locotioni. ore a
ften helpful in providing useftil information for the
17 Please list all of your residence? during the last 10 yean (list no infonnaiion prior to your 1 5lh birthday). Begin with your mod currem residence.
Address of Residence
City. Sute &Zip Code
E>ates
If rented, give name & address of the penon
responsible for the collection of rent
From
Monlh^ear
To
MoniWear
Personal History Statement
^Experience imd Employment
IS Beginnmg with yourmosi oirrcni anplo>TTwnt or bustnns poi tiioa held, plusc Itst til jobt (including pan-Umctemponry, uid volunurv positions)
you Kive held intheptst 10 ycATs (For the purposo of thu penona! hjnory suumenL, volunteer w(xk should be UKluded u eniployrnenL) for
idneiificition vtd venfi&thon, pleue indicate the nature of (he activity, i e.. fut1>tm>e. pan-tune, or votuntar> If you have had intervening periods or
Rulitam service or unemployment, pleau list those pcnods in sequence tn the spaces provided Also include all ownership mtertfis in those
businesses
n«l«Kftffmnlo^-mwi1
K»mf »r^ %AAr^^ »f ^mplnvw
\«mgnfmpw-n<ftf
Naines(s) of c(KworkeT<s)
Title or duties (for idemificauon purposes)
Reason for leaving
,yYr |t„ I MoyVr
nmnnfrmnlroTTimi
Nnmr anil fliirtrra nf rmnlnir
N«mf nf;irp>rvi.nr
N*nies<s) of co-worlterls)
TiUe or dunes (for idenuficalion purposes)
Reason for Iej\-ing
' /^' I To I '^V'
Half^nf rmplni.Tnfni
r^'jimf «fi.j \^(*r^^ nf ^mplrtytT
\xmfnffiupfT\-,i.r,r
Reason for leavmg
n.t^ ,^f -mplovmfni
Mo Yr
Names(s) of ctywortter^s)
Title or duties (for identificalion purposes)
,/Yr |t, I MTyY
N>"^ ^p^ r,^'*'^^ "^■•^TT'iyn
N»m/-nfcip<.TVi«/^r
N«dm(s) ofc^-wcrkeits)
Title or duties (for ideniificaiion pwpoKs)
n vo
Reason for leaving
|Fn„.| ""V" |to j Mo 77
329
Personal Histoiy Statement
Sxperienc^ and Employment ,_ Conunued
19 Would Any problem rcwtiifyourpr«Mracntp)oyawuconUcleddunng the counc of the background investigition?
If *no' when ihould such conlict be mide'^
20. If you hive h*d oo prior emptoymem, pleue cxpltin in the ip«cc below.
2 1 - Have you hid tny extended work ibsencet for reisons other than eanted vacaiioni? Q y PI
lf"yci,' Please eiqilain (include wtKn, name of empoyer. why).
33. Have you ever been fired or asked to resign firom any place of employmeni'' n „ n
If "yea," picaac give deuiU (include when, where, circunmanccs)
33. Have you cw been a tuoccssful or unsucccnfiil candidate for another positioo tn mdiao gaming or the gaining induttry in gOMnt? n
If 'yti.* pkax give detub (include wfwn, name of tn*bc or butmeaa, cvcumiuaoca).
330
Personal Histoiy Statement
Pxperi«nc« «t)d Enfiloyment _
24. Bepnniiig with Ihe mofl cuirenl, list my exifiing ind previous businea rtUtionhipi with Indian thba. including ownenhip imerat in thoie buiincncs.
N.m.ofj
n.i^nf^mnto^intnl
Ki.n.. ..vH .Mr^ nt .trnilfJ^T*
From To
Mo. Yr Mo. Yr.
Titk or duties (for idcnuioauon puipoMi)
Ntina(s) orocMworkcf<i)
,/Yr [to I MoyYr
n.i><nf,.mr.lnvTTi«il
^■■.^* .^ .A4r«. f,f ^mplnv>T
Title or duties (for idenuficaljon purposes)
NuMS(t) of co>workef<s)
Reuon for leaving
>/"" I To I '^V^'
n.t«^f-mplnvw^l
^^^» ,r^ ,AAr^ ^f ^mr.lnv>T
Tiik or duties (for identificuion purptnes)
Nama<i) of ccKwortcer<t)
Ifh^I M0./Y,. |t„ I Mo/yT
n.l-nf.mplm»n.nl
M.~ .~< .A4~. „f-^lnv»
M.m. Af ^,p.rv.cnf
Title or dutio (for idemScaucn pupoMt)
NBniei<i) of oo-woriteKs)
./Yr It, I ^^
331
Personal History Statement
:Experienc« and Employment
35. Bcgiming with the nwa recent, lid any tnd all pervious busincs reUlionshjps wnh the gamijig industry genermlly. iiKluding mlcrtMs m those businesses-
Mmin» .n/< .HA^. nf .mplnvrr
n.i>.nf>tnnln%Tiin
^ FuU-linie
^ Psn-time
'-' Volm««y
Title or duties (for idcittificaliori puposa)
Ntinei(s) of co-workerts)
Reason for leaving
iFro- I M°/Y' |To I M<^77
n.1^ Af ..^Invm.^
V..~ .~< ./M,^ nf ..rmlnv^
V.m.nfn.n.,^To,
tJ FulUime
*— ' Part-time
D Voluntary
Title or duties (for Hjcmification pwposcs)
Naines(s) of co-wQrlcef<s)
Reason lor leaving
[From I >*'/'<' |to | Mo. yvT
n.1- ,.f-,^lnVTn«.il
M.~ .~< .Ah.^ .sf-^lA.-.
Mo Vr. Mo Yr
Title or duties (for identifictfioo purpoacs)
NaiiMS(s) of co-workcr(s)
|Fn» I ^ /" |to I >^/~
J^BauUDBlOBBIL.
.^iMDLJB^tUtautapJflasL.
Yr. Mo. Yr.
Rmmq far leaving
Tak or duiiaa ((or idoaifialica pupoiaa)
NaD(i(t) orc<Hinr<ur(s)
V^' |To I "iS^
332
Personal History Statement
!xp<drtenc« «nd Employment
26 Lixl the fume ind ■ddress of any licensing or regulalvy agency with which you have filed an appliouon Tor a Uccme or peniul rclal«d to gaming whether or
fMt Mich licerac or permit was granted Also include the dau the KfpUaCMa was filed.
^Z^^SSS^S^jj^^^
M.mf nfti
""" "' """I"
Title or duties (for identifecftioo putpoMS)
NaiBa(s) of cD-worfcott)
|Fn«. I ^oy^' I To I "°7^
g v^.i.-
n.t><»f^TT^plovmwit
W.»^ »rA ^Mr^, nf i^Tipl«v>r / «fTVV
N.fTW nf «i|w^-io^
Title or dunes (for idenuCcUion pufpota)
Niffles(t) of a>-workcr(s)
Retsoo for leaving
' /"" I To I "°/^
"■'""''"T'""""
U..~. .-H .Mr^ nf .-^Inv^ / .i.^,-..
D
Title or dulia (for tdcnuficuioii puipoMs)
NiiDei(>) of co-workei(i)
1f,«,| >«"/y' |to I ^°7^
rW_ nf-^lnyiTW^
Uo. Yr.
Raaaoofor leaving
M.». .~< .Atr^ ,rf.^/~- / .p.^^
M.m>nf«ir>.vi.,»
NaoM^i) of oo>woricci<s)
Title cr itoxs (for ideaificMico purpoaca)
I ^' /^' It. I "°/^
333
Personal History Statement
IBxperience and Employment
37 Lisi the nuna >nd iddresses of uiy licncsing or regulatory agency with which the penoD has filed ui application for a
or not such lictnsc or permit wras granied and the dale nich request was filed
upaiiona] liccrae or pennit, whether
N.m^ .nrf mHrtri^ nf wnnlnvw / totne^
Nitmf nfM.pCT^^^n^
n.t^nfwtinlftvmwil
To
Title or duties (for idcniiiicalion purposes)
N«nia(i) of co-worket<i)
Reason for leaving
Ift^ I **'/•" |to I mo/yT
n.l^rtffmplr.v^WdTil
VJ.fpi. .nH .H^r^ »f i^npl^v^r / .y^txrv
Title or duties (for idenUflcation purposes)
Nanies(s) of co-worker(s)
Reason for leaving
|F„n.| **"/'" I To I M°/Y
niinnfrmrlnjTnmi
K.m^ .n^ .f4Hr^t ^f ^rnnlnvw ' .yw^-v
Title or duties (for identification purposes)
Naines<s) of co-worka<s)
IZI
r>.i^.>f.myiln^m>n<
M..-. .~< .AWn nf >«.pln>w ; .f~^
Mmo nf nip.>v..n.
THlc or dutia (for idntificalioB pupoMt}
NaiMl(t) of oo-w«ka(i)
|Fn«. I Mo/Yr | ,.„ [ Mp-yTT
334
Personal History Statement
^loaaciai
J«. Tlitm»Mgonmofper>onilfiMncaUrtlev»nlloinindividu»ri<fuliricai<mforlliepo«il» Thcrtfort, pteMt ai m Ihc
ruuma.1 MlOTcnu belo» Be compUu md iccumt Th« inKxiB of aidatrfnea in ilidf wH na be UMd in evtluMiig your qu»lific«ion».
but ralher th« bcluvior exhibiled in meeting ytxir finmcia) obligitions-
CuiTcm Monthly Income ]
Cteren MoMhly Expendinires |
Monthly ubry
Spouie'l laUiy
Other monthly incone - describe:
S
Real Emu (montaite) f,ytaaMf)
S
RO,
Other moolhly paymctti -
TOTAL MONTHLY INCOME
Eoinuud monthly cca ofliving (inchide utOilies,
auminnea. etc) nd ny ocbcr ol>li|iticn..
TOTAL MONTHLY EXPENDITURES
s
S
CuiTtnt AiKls 1
Cunen Lubilitiei 1
ChKking
RedEoale
%
s
Lon-UrraLom
Slodu ind Bondi
Ofeer Liibililiel - dacnbe:
Lifc inurance (caih vmlue of whole
life polity)
ABM - -
OdicrAaeii-dacribe:
TOTAL ASSETS
i
TOTAL LIABOJIIES
i
335
iFmanCf al Conu nued
Persona] History Statement
29 Plc*s« tupply more dcuiltd information tboui your ch»fg<
corttricu. or other financial li»bilit>«.
Acooum Number
30 Have you ever filed for at declared banknipicy?
If '*ves.~ please give demis (include when, wtwft. why).
D
3 1 . Have any of your bills ever been turned over to a collection agency? Q]
if "yes." please give deuils (include when, firms involved, circumsUnoes)
32. Have you ever had pudiascd goodk repoaacoed?
If "yea." please give detaib (include when, finni t
D
336
Personal History Statement
jlitaiy Service
33 If you tn » mak under ■ge 36. pittat pnavKk the following
Sdcdivc Service Number
Approxiiniu Dele of Rcpflntion
Ail^eH el Tnc ofRcgiitntiaii
34. Have ycu «vtr tcrved b the vmcd forces, Neboial Guwd or miliury n
tf >ei,' flntr supply tJM following infaniwtian:
Bnnch of Service
Service Number
Due of Service
35 Are you cufTently participeiing m eny milrtarv rnervc or Nibonal Ouird progim? 11 Yw
D No
36. Have you ever been the nibjed of any judicial or ooa -judicial ductpltnary aciioa wiiile in the nulitary. National Guard or miliiaiy n
If "yo," plcMe five deuib (include branch of service, when, where, circuniaanco>
37 Pail convnanding officers or mi)iuj>icquiimanccs are poUflialaourceiorrclcvviitnforiBBtion pertaining to yo^ Plcsae list tboee
mdividuaU who know you well enough lo provide iccunu mfonnation about you.
M. tfyouhiwrwbMnafnsudvcsxivicudforinyanniCcidudait nScvKlalkmt\pl€atpyit«>tfoa<rmgiB!amaiaa: (Da &a Dm ynur
fW0>4 may bvc been tfiecud by i mlnit m cipuit<n««. • rdoe. or • pBdoc hxl qaciSc ks>l raplicalxn ■• u> bow )« ■hoiild ■»»« Dm
quiOHai FtaM mc the INSTRUCTION ftpi f<* > deuiM piiik.) Lis ill on e-an (nHCUtiom. fdcoy or mbdemoaor or ranviaioa tmtct.
IIk div^ . anic nd addrai of Ok c>iun invoked, Ihe aiTMiBf •cmcy. iDd tka <tu <tf«iM nd du of «qiaa»
Apfn»LDac
MkaA«BKy
CmnWM
337
Persona] History Statement
39 Hive you ever been pUccd on court probftlion u ui aduh**
Vya.' ple4se pve deuils (include wriwn. wtierc, wbv).
40 Lifl each cnmmil charge, (excluding minor traffic duvgesX wtiether or oot there b a cxmvicijon. if witch crimina] charge b within 10 yean of the
dau ofthu application and t> not otherwise listed above, the cnminaJ charfe, the name and addrca of the arreting agency, the oourl involved
and the date and dupociUon:
Violation(s)
Convicted
Approx.Datc
Pt^ce Accncy
Court
□ Y» □ No
□ Y= □ N.
□ Y= □ No
□ Y« □ No
□ Y- □ No
□ Y« □ No
41. Are you now or haw you ever been involved as a plamiff or defendaol many civil action''
If "yei," plese give deuils (include when, where, name and location of court, circumstancca).
I^EOT VdUclc Operation
An invcttipiicn of your driving history will be made through a recordi check. To expedite this procedure, plcaae nipply the following infbrmitiaa:
42. Drwtr^ license number
Sutt
Ei^mlModau
Name under which licenK wu gnxaed
43. Please list other stales where you have b
een licensed to operate a BioCor vehicle.
Sutc
Slate
Suu
Name under whid) license was
granted
Name under which liccDK was
granted
Name under which license was
piAed
Nme under wbidl lioensc wis
338
Personal History Statement
Motor Vehi«leOp«Tfltio^^ Continued
44 H»v. you eve. bten refilled •dnvo'ilioitK by my lUU?
If -yev- pleM« e«pliiii (incKide *(ien. where, why)
45 Cilifomii l»w requires lh»l operuor ind ownen of mMo. vthiclei be covered by eiaomobile lUbilily imunnce or bond or dtjimrl of $35,000 wilh
die Deptnmert of Moloc Vehicles Therefore, pleeje lia the cmrenl liebibly insurance you htvt with your motee vehicles.
Company
Address
Policy Number
Date of Expiration
If vou ire bonded or hive depoiiled $35,000 lo meet your motor vehicle finincul rtsonribaity. please mdinle
DBond 1—' $35,000
4< Ple.se list til traffic ciulioiu (exclude pMkingciluiora) you hive received withia the Un 5 yem
Nattireofviotition
Appronniate Date
Indicate whether fined or action
taken on irivtt't license
47. Have you ever been involved as • dnver m a motor vehicle accident withm the last 5 yean7
Date
Location
Police mvcstigalioo?
PoUcc Agency
Doe
Location
Polia investigtlioa?
Police Agency
DM<
Location
Police inveoiislioa?
Polioe Agency
Dat
Location
Police invcsugauon?
Police Agency
Du
Location
PoUceAccncy 1
339
Personal History' Statement
*^Y*K''*^*P^*'<". Continued
48 If there u ui>ihing you wish lo discuss ibout your dnvmg record, pluse use the tpace below.
49. Has your license ever been suspended, revoked^ or plkoed on negligent operalor's probation? PH
If "yes." please give deuils (include whil, when, where, why).
D
iGcnerai Information
50 Hive you ever been refused insurance for any reason other than failure to pay a premium?
If 'yes,' please explain (include company name and addrest, dale, «nd reason)
D
31. Have you ever applied for a permit to carry a ooooealed weapon?
Ifyo.' pleaie provide the following mfomnion:
□ Y-
I hereby ocrtJiy thai all oaiements nude in this penooal Ufiory
BMloial facti will iub)ect me to diaqualificalion or d*imi»al
•re true and cocnplete, and I unkntand thit my minutancnu of
Dale oonplded
340
National Indian Gaming Association
904 Pennsylvania Avenue. S.E., Washingion. D.C. 20003
Phone: (202) 546-7711 FAX: (202) 546-1755
August 11, 1993
Dear Members of the Native American Affairs Subcommittee:
By letter dated August 3, 1993, Rep. Robert G. Torricelli of New Jersey wrote to you
urging your co-sponsorship of his bill, H.R. 2287, entitled "The Gaming Regulatory and State
Law Enforcement Act of 1993". Regrettably, Mr. Torricelli's letter is shot through with
inaccuracies, distortions and outright misrepresentations with respect to the operation and
regulation of Gaming on Indian reservations, and the Congressional and Administrative oversight
that has been devoted to these gaming operations.
The initial distortion begins with the capitalized title in which he asserts that gaming
operations on Indian resei"vations are "dangerous" and "unregulated". No evidence is offered to
support either of these allegations.
In his statement to accompany the mtroduction of H.R. 2287, Mr. Torricelb stated:
"When IGRA [The Indian Gaming Regulatory Act] was first passed there was
little indication that organized ciime was infiltrating gaming on reservations.
However, over the last five years this has become a significant problem." (Cong.
Rec. pp E 1367-68 - May 26, 1993).
On July 27, 1993, in a letter to the Chairman of the United South and Eastern Tribes Gaming
Association, ms. Mary C. Spearing, Chief of the General Litigation and Legal Advice Section,
Criminal Decision, Department of Justice, wrote as follows:
"As alluded to in USET Gaming Association Resolution UGA 93-04 ...
representatives of the Department's Criminal Division and the FBI testified before
a Senate Committee that very httle evidence of attempts by the organized crime
"families" to infiltrate Indian gaming had been detected. We have no reason to
modify that evaluation at this time."
A copy of Ms. Spearing' s letter is attached.
341
U.S. House of Representatives
Native American Affairs Subcommittee
August 11, 1993
Page Two
Mr. Torricelli asserts that Indian gaming is "unregulated." Nothing could be further from
the truth. It is in fact regulated first by the Tribes themselves; second by oversight from the
National Indian Gaming Commission established under the Act; third by the Department of
Interior and the Department of Justice; and finally, with regard to those tribes operating games
that are subject to compact with states, the states themselves. The integrity of the games
operated by the Indian tribes is attested to by the small number of criminal complaints that have
arisen from Indian gaming operations. These statistics will certainly compare favorably with the
criminal complaints arising from gaming operations in any other part of the country.
Mr. ToiTicelli refers to a report of the Inspector General of the Department of the Interior
issued in December of 1992. This report was critical of the oversight that had been exercised
by Federal agencies over Indian gaming operations in years past and concluded that certain
leasing agreements of gaming equipment had resulted in significant losses of income to the tribes.
At no place in this report was the integrity of the gaming operations questioned. Since this report
was issued, the National Indian Gaming Regulatory Commission has promulgated its initial
regulations and the Commission is now moving into full operation.
At the heart of Mr. Torricelh's bill is a concern expressed both in his introductory
remarks and in his recent "Dear Colleague" letter, i.e., that Interior Department regulations allow
"the establishment of 'gaming enclaves' far away from existing tribal reservations" and that
'[T]hese rules have encouraged several groups with dubious claims to apply for federal
recognition for the sole purpose of operating casinos free from state regulations."
In fact, only twice in the five years since the Indian Gaming Regulatory Act was enacted
has the Department of the Interior accepted lands into trust that were not inside of or adjacent
to an existing Indian reservation, and in each of theses cases the Governor of the State where
such lands were located approved of this action. Existing law and regulations governing this
subject arc cleaily already restrictive.
Mr. Torricelli expresses concern for non-federally recognized tribes or groups petitioning
the Secretary of the Interior for recognition as a "federally recognized tribe".. First, he assumes
without examination that the claims of such groups are "dubious" and are made for the "sole
purpose" of operating casinos free of state regulation. In fact, the Interior Depaitment regulations
governing petitions for Federal recognition were promulgated in 1978 in order to address long
standing efforts of non-federally recognized tribes and groups to achieve Federal recognition,
some of which date to the turn of the centuiy. It is worthy of note that one such petitioning tribe
exists within the State of New Jersey.
The bottom line of the TorriceUi bill is that it would destroy gaming on Indian
reservations and all of the jobs and economic benefits that flow not only to the Indian tribes and
342
U.S. House of Representatives
Native American Affairs Subcommittee
August 11. 1993
Page Three
their members but also to the surrounding non-Indian communities. The "competitive advantage"
that exists for tribal games exists only because of the more restrictive laws of the states that
surround the reservation. If the restrictive laws of the states are made applicable to the tribes,
the tribes will be unable to attract business to their lands.
The principal purpose of the Torricelli bill is to protect an industry in Atlantic City and
Nevada and to deny tribes an opportunity to compete. The bill does not seek to establish a
"level playing field". It seek to limit the players on the field to one team only.
Sincarely
Smcarely, /^
Rirhar/t r. Hill I
Richard G. HUl
Chairman
Attachment
343
U.S. Dcptirtnient of Justic^
Wlt'iKUttNi. D.C iCSiO iff _
^JUL 2 7 1993
Phillip Martin, Chairman
United South and Ea8t«rn Tribes Gaming Association
400 N. Capitol Strest, N.H.
Washington, D.C. 20001
Dear Kr. Chaiman:
This is in response to your latter to the Attorney General
suggesting that the Department conduct an Investigation of Indian
gaming operations to determine whether or not there is a basis for
allegations of organized crime involvement.
The investigative am of the Department of Justice is the
Federal Bureau of Investigation. One of its highest priorities is
the detection and investigation of organized criminal attempts to
infiltrate or exploit legitimate enterprises. The Bureau's
authority stems from a number of federal criminal statutes,
especially those contained in Chapter 95 (Racketeering) and
Chapter 96 (Racketeer Influenced and Corrupt Organizations) of
title 18 of the united states Code. when evidence of criminal
violations is developed the matter is referred to the appropriate
United States Attorney for prosecution. We are confident that the
Bureau is carrying out its responsibilities with diligence and
vigilance and that no investigation focussing on Indian gaming
operations in general is warranted.
As alluded to in USET Gaming Association Resolution uga 93-04,
which you included in your letter, representatives of the
Department's Criminal Division and the FBI testified before a
Senate Committee that very little evidence of attempts by the
organized crime "families" to infiltrate Indian gaming had been
detected. We have no reason to modify that evaluation at this
time.
The Department fully appreciates the importance of crime-free
gaming to tribal economic development and the congressional
policies in that regard. I assure you of our continued interest in
achieving and maintaining that goal. We hope we can count on your
344
support for efforts to strengthen the regulatory mechanisms
currently provided in the Indian Gaining Regulatory Act.
Sincerely,
John C. Keeney
Acting Assistant Attorney General
Criminal Division
\L "
MaAr Cj Shearing, /Chief
General Dltigatioh and
Legal Aavice Section
Criminal Division
345
Mr. Abercrombie. Thank you.
Mr. Wapato, I wanted to merely indicate that I quite agree. The
lotteries are not taxed, individuals who profit from the lottery are
taxed on their individual income, and so you would be in agree-
ment with the previous testimony, would you not, that tribal bene-
fits which may accrue in the form of a school are not taxed, but
if an individual within the tribe receives an income that individual
indeed pays taxes?
Mr. Wapato. The individual indeed does pay Federal income tax.
State income tax. Many of the employees are non-Indian employ-
ees, they pay Federal taxes. State taxes.
Mr. Abercrombie. So the implication from previous panels that
Indians are not pajdng taxes as opposed to a nonprofit tribal entity
are at least, if not incorrect, misleading?
Mr. Wapato. They are misleading, they are incorrect and grossly
inaccurate. Anybody that works at the casinos, Indian or non-In-
dian, does pay taxes, both Federal, and if there are State taxes,
pays those.
Mr. Abercrombie. Very well. I have no questions at this point.
Mr. Abercrombie. Mr. Calvert.
Mr. Calvert. Thank you.
I just wanted to point out from California's perspective, I know
I keep coming back to California and there is reason for it. Of the
200 or so federally recognized tribes in the United States, approxi-
mately half are in one State, and that is California. So, obviously,
we have great concern, not so much for economic competition, but
because of problems that could possibly exist when you have large
numbers and possibly large numbers of reservations starting to op-
erate casinos, as they presently legitimately do with Class I and
Class II gaming, which is allowed in the State of California.
As you know, Class III gaming is not allowed in the State of
California presently, and we are quite concerned that some res-
ervations have taken advantage and are operating certain Class III
functions without proper permission.
Now, there is only one federally recognized tribe in the entire
State of Connecticut, I believe, is that correct?
Mr. Wapato. At the present time, yes.
Mr. Calvert. And so it obviously makes enforcement of that par-
ticular casino much simpler. In California's instance, if we had
Class III gaming, wouldn't you agree that the complexity in Cali-
fornia, you have some experience in California, understand Califor-
nia, would be tremendously more complex?
Mr. Wapato. Well, the complexity can be made simple, though.
In this matter, the compact that we negotiated between the State
and the tribe, and so whatever layers of regulation and enforce-
ment that need to come into play can come into play between the
State and each individual tribe.
At the present time, there are only 16 tribes in negotiation for
Class III in the State of California. Aiid I think it might be a little
bit inaccurate to say that there is no Class III in California. The
court decision, the Burrell decision has indicated that elements of
the California lottery are, in fact, Class III t3T)e of gaming, and
therefore the tribes can negotiate for those.
346
And having said that, they can negotiate for them doesn't nec-
essarily mean that all 94 tribes will end up with Class Ills. As you
are well aware, the geography of California, many of those 94
tribes are in very remote areas and would have very small likeli-
hood of developing large-scale or meaningful Class III type of oper-
ations, and so I think the very fact that that decision — I think
there is some confusion also if there is a video machine or the video
device of any type, that somehow that is a slot machine.
There are, in fact, electronic pull-tab machines that are Class II
machines — and you asked a question of the national Indian Gam-
ing Commission earlier. It is our opinion that — and the tribe's opin-
ion that those machines are clearly Class 11. And if they are clearly
Class II, they are clearly under the purview and regulation of the
National Indian Gaming Commission and could be subject to any
of those regulations. So it is not unregulated.
I think one of the other questions that came up was who docu-
ments, and who accounts, and how do you follow through the
money that might be going into those maclunes? And that is clearly
a tribal regulatory matter. The tribes have passed regulations
under the National Indian Gaming Commission regulations of Jan-
uary 22nd.
There are certain audits, certain things that they must have in
place, and they are in place. And those, in our opinion, are also
clearly under the National Indian Gaming Commission's purview
and regulation.
But as several people have said before, the tribes need to assure
the integrity of their own game. They have to have a game that has
integrity or their patrons won't come. And if their patrons won't
come, then it doesn't make much sense for them to — I mean, it is
only in their best interests to make sure that regulations are
Mr. Calvert. Obviously, there is a difference of opinion with var-
ious Federal agencies on what is Class II and Class III, certainly
in the State of California. The problem exists as far as what some
people believe was the intent of the Indian Gaming Regulation Act
was only to allow gambling which was consistent with what was
legal within a particular State.
Then we get into definitions of what is Class III and what is
Class II. So there is some confusion. And wouldn't you agree that
we need to clarify where everyone understands clearly what is
Class II gaming and what goes into Class III gaming?
Mr. Wapato. If all 50 States had similar regulations regarding
gaming, then maybe you could do that on a national basis. It would
be impossible to do that on a national basis because each State has
different regulatory schemes on gaming and has different games
that are legal in that State.
What the State of California has been unable to understand at
its negotiating level is that they have quite a broad public policy
on which games are in their State. And in the lottery itself, there
are probably between 30 and 40 variations of the games that are
within the State lottery.
The court, the Federal court did not lightly look at that public
policy of the State of California. They tested it back against the
findings in the Cabazon case and then they tested it back against
the requirements of IGRA, and then they came up with their deci-
347
sion. And within their decision, they indicated that certain of those
games in the lottery are Class III.
The State of California, negotiating at the highest negotiating
level, I should say, the governor's level has been, I guess, unable
to see that public policy distinction. I don't think that the charac-
terization that the IGRA permitted certain types of gaming is to-
tally accurate. I think IGRA restricted what the tribes could do be-
fore the act.
It didn't permit tribes to engage in gaming. It restricted their
ability to engage in gaming. And it gave the State an inroad on to
the tribal sovereign turf by requiring the compact to be negotiated
between a tribe and a State for the Class III.
Mr. Calvert. Now, going beyond slot machines, as you probably
are aware, there are casino ships docking in California, large tour-
ist industry in the State of California. And there were reservations
saying, well, California allows those ships to dock, so by definition,
they are allowing craps and roulette and all those other kinds of
games that take place in Las Vegas to take place, so we should
allow that to take place conceivably on all 94 reservations. That,
obviously, made the State of California very concerned that once
we step into slot machines or whatever we are going to define those
as, that we are going to go into full-scale gambling. And in the
State of California, obviously, when we have half of the Indian res-
ervations in the State, even though you mentioned there is only 16
negotiating, that is 16 times more than Connecticut, at the present
time, it becomes a very, very tough issue.
One of the consequences of that, I think, and I would think that
the various tribes thought of this, is if Class III gaming comes to
California on the reservations, don't you believe that it is conceiv-
able that the State, at that point, wiU just throw in the towel and
legalize gambling in California?
Mr. Wapato. I am a little hesitant to predict what the State of
California might do in any case, but
Mr. Calvert. I will share that opinion.
Mr. Wapato. That could be a possibility. And I understand they
may be under some pressure to do that.
Mr. Calvert. What I am getting at is the advantage that Class
I and Class II gaming in California now with the reservations that
they have, they are getting considerable revenue from those res-
ervations. I don't detract the fact that it is going into good works
with those reservations in California.
What I am thinking is sometimes too much of a good thing is
going to kind of kill the goose that is laying the golden eggs here.
If that happens in California, what happens to the competitive ad-
vantage that the reservations presently have and having an effec-
tive monopoly on Class II gaming in California?
Mr. Wapato. I guess they would be in the same predicament
that 483 casinos are in the State of Nevada, they would have to
compete with each other.
Mr. Calvert. And at the same time, we would possibly be put-
ting something on our society in California that a majority of peo-
ple in California don't want.
Mr. Wapato. Well, I think it is clear that the majority of the peo-
ple in California don't want non-Indian casino gaming. I think it
348
is equally clear from a public opinion poll conducted by the Field
Public Polling, that an3rwhere from 64 to 76 percent of the citizens
of California support Indian gaming and Indian casinos on a res-
ervation. They support it for two reasons, which I think are the
right reasons:
Number one, they support it because it would be beneficial to the
Indian tribe as an economic development venture. Number two,
they support it because they see it as an entertainment option, and
they would use it for that reason. Those same people in that same
poll would oppose non-Indian gaming.
Mr. Calvert. That is what I was going to bring up. One last
comment. As a consequence of Class III gaming coming to Califor-
nia on Indian reservations, if those same individuals were asked,
as a consequence, the possibility exists that gaming will come to
California statewide, non-Indian gaming statewide, in L.A., in San
Francisco, in San Diego, all the urban areas, do you believe that
those same individuals would be in favor of it?
Mr. Wapato. I think if those individuals are the citizens of Cali-
fornia that, yes, they would. I think if those individuals are the ad-
ministration, they would say no. They would say no, I think, for
the same reason, partly the same reason that we heard from Don-
ald Trump and Congressman Torricelli, and it would be for eco-
nomic reasons, that it was the tribe's
Mr. Calvert. In our case in California, we are not — I don't care
what Las Vegas does or what New Jersey does, I care about the
State of California, and what I am concerned about is gambling.
Unfortunately, we can get into the societal ills of gambling, and
once we bring that into an urban setting, the problems that could
exist from gambling on poor people who use up their paychecks to
gamble, and so forth, and so on, I don't want to preach that — what
I am stating, that I believe a different view, that most people in
California would not want to see statewide gambling. Class III
gaming in the State.
I do agree with that the people in the State agree that Indian
gaming should be allowed, Class I and Class II gaming, and if, in
fact. Class III gaming came to the reservations, I think the unin-
tended consequence of that would be is that gaming would go state-
wide, and I believe that most people in the State would be opposed
to it. Now, that is my opinion.
Mr. Abercrombie. I am going to exercise a prerogative of the
Chair because I think this has been stated adequately by both
sides, and we have others who have been patiently waiting.
Mr. Elroy, I apologize, I think you were out of the room at the
time I called your name, so I will ask you to take up your testi-
mony at this point, if you would be so kind.
STATEMENT OF RICHARD JAMES ELROY
Mr. Elroy. Okay.
Thank you, Mr. Chairman.
Mr. Abercrombie. Aloha and welcome.
Mr. Elroy. I am a retired special agent of the FBI, recently re-
tired. For 16 years I investigated matters involving Native Ameri-
cans in Oklahoma. Oklahoma has the largest concentration of Na-
tive Americans in the United States.
349
In 1989, I was assigned to the United States Senate, Committee
on Investigations, Select Committee on Indian Affairs. During this
assignment, I reviewed gambling activities on approximately 100
reservations in 24 States.
In the course of my U.S. Senate assignment, I have found a pat-
tern of activity relating to Indian gaming operations. Almost with-
out exception, Indian tribal officials contract with non-Indian out-
side companies to build and operate their gambling operations.
In the majority of these cases, these non-Indian companies prom-
ise much but deliver little to the tribe. The corrupt tribal leaders
end up doing well, and the contractor ends up doing well, but the
rank-and-file Indians weren't ending up with very much.
Most of the contracts dealt with a division of the profits or net
profits to the tribe. The problem is that, in many cases, the skim-
ming and other activities left no net.
Connecting Indian management directly to traditional organized
crime, such as La Cosa Nostra, the LCN, is very difficult. The LCN
members are very sophisticated and effective in being able to dis-
guise their direct involvement and influence in these areas.
They use a myriad of methods which camouflage them from the
public view. They hide their interests through layers of fronted
businesses. In most cases, what we see are front men. These seem-
ingly legitimate management companies, working at the behest of
the LCN figures, are usually disguised within a host of professional
sounding corporations.
These front men will in turn employ others who may not even
be aware of the LCN involvement, but who willingly participate in
the scheme or fraud which is contrary to the tribal interests.
These management companies utilize a number of schemes
aimed at skimming profits. These schemes and devices include
management fees, shills, rigged games, and a host of other scams.
In the end, the management firms end up with a profit and the In-
dians end up holding the bag.
My observations were shared by Tony Daniels, Assistant Director
of the Criminal Investigative Division of the Federal Bureau of In-
vestigation in his testimony before the U.S. Senate in 1989.
One example is an LCN group in Florida. This group became in-
volved in the control of bingo operations on the Seminole Indian
Reservation in the 1980s. The LCN used front men, utilizing a
group of management companies.
This Miami-based LCN found willing participants in their
schemes among corrupt tribal leaders. This LCN group also ac-
quired direct interest in the manufacturing and sales of Indian
gaming supplies.
In 1989, I interviewed a connected member of the LCN who oper-
ated gaming facilities on Indian reservations for the mob. He ad-
vised that certain Indian gaming operations were financed and con-
trolled by Anthony Acceturo.
Mr. Acceturo, I don't think I need to describe who he is. He stat-
ed that in order for the mob to hold their control over Indians, and
this is the California case, that three tribal leaders were killed.
Subsequently, they didn't have anymore problems.
In testimony before the U.S. Senate on February 8, 1989, a wit-
ness under the Witness Protection Program testified that he
84-760 O - 94 - 1 2
350
skimmed money for the Luchese family on the Barona Reservation.
He testified as an example that a $5,800 jackpot on the Barona
Reservation was won by an employee of the paper supplier to the
Indian reservation in a rigged game.
He testified that Indian bingo is open territory for the mob. He
stated that the mob is involved in laundering money through In-
dian reservations. He also stated that he had personal knowledge
of 12 Indian gaming operations directly controlled by the mob.
ABC's Morton Dean recently filmed Eddie Somuna as he was
managing the Viejas tribal gaming hall in California. Somuna was
convicted of felony gaming charges in Detroit and is an alleged mob
connection.
In the meantime, there doesn't seem to be any Federal control
of Indian gaming operations. My sources in Indian reservations in-
dicate nothing has changed. The Indian gaming industry is wide
open, with no control, "business as usual," the mob and corrupt of-
ficial get the gold mine, the tribe gets the shaft.
The theme of my testimony is we hear about these layers of Fed-
eral people that are looking at Indian gaming. That simply just
isn't true. You talk about the United States Attorney's office. They
are prosecutors. They act on information given to them by the Fed-
eral Bureau of Investigation.
The Federal Bureau of Investigation acts on information it re-
ceives alleging violations within their jurisdiction. But the FBI and
U.S. Attorney's office do not act as regulators or oversight on these
Indian gaming operations.
Now, we have an Indian Gaming Commission that is supposed
to do that. That is their job. I don't see how you could possibly do
that job with less than 30 people. That would require a vast ex-
panse of their staff, a few hundred investigators and some account-
ants to determine what exactly is going on, where is the money
coming from, where is it going to. You have to know this.
If you have a management company operating an Indian gaming
operation and they are billing out $5 million for purchases of slot
machines, unless you go out to the reservation, count those slot
machines, compare the serial numbers with the numbers on the in-
voices and determine they actually spent that money, and the ma-
chines are in place, you have no idea where the money went.
[Prepared statement of Mr. Elroy follows:!
351
TESTIMONY OF RICHARD JAMES ELROY
RETIRED SPECIAL AGENT — FBI
BEFORE THE HOUSE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
OCTOBER 5, 199 3
My name is Richard James Elroy. I am a retired special agent with
the FBI. For 16 years, I investigated matters involving Native
Americans in Oklahoma. Oklahoma has the largest concentration of
Native Americans in the United States. In 1989, I was assigned to the
United States Senate, Committee on Investigations, Select Committee on
Indian Affairs. During this assignment, I reviewed gambling activities
on approximately 100 reservations in 24 states.
In the course of my U.S. Senate assignment, I have found a
pattern of activity relating to Indian Gaming operations. Almost
without exception, Indian Tribal Officials contract with Non-Indian
outside companies to build and operate their gambling operations. In
the majority of cases these Non-Indian companies promise much but
deliver little to the tribe. The corrupt tribal leader will do well,
but the rank and file Indians get nothing. The contracts look good.
They promise 50% of the net profits. There are no net profits. The
profit is "skimmed" off.
Connecting Indian management directly to traditional organized
crime, such as La Cosa Nostra (LCN) is very difficult. The LCN
members are very sophisticated and effective in being able to disguise
their direct involvement and influence in these areas. They use a
myriad of methods which camouflage them from public view. They hide
their interests through layers of fronted businesses. In most cases
what we see are front men. These seemingly legitimate management
companies, working at the behest of the LCN figures, are usually
disguised within a host of professional sounding corporations.
These frontmen will in turn employ others who may not even be
aware of the LCN involvement, but who willingly participate in the
scheme or fraud which is contrary to the tribal interests.
These management companies utilize a number of schemes aimed at
skimming profits. Th^se schemes and devices include managei^pnt fees,
shill players, rigged contests, and a host of other scams. In the end
the management firms end up with the profit and the Indians end up
holding the bag. My observations were shared by Tony Daniels,
Assistant Director, Criminal Investigative Division of the FBI in his
testimony before the U.S. Senate in 1989.
One example is an LCN group in Florida. This group became
involved in the control of bingo operations on the Seminole Indian
Reservation in the 1980s. The LCN used front men utilizing a group of
management companies. This Miami-based LCN found willing participants
in their schemes among corrupt tribal leaders. This LCN group also
acquired direct interest in the manufacturing and sales of Indian
gaming supplies.
352
In 1989, I interviewed a connected member of the LCN who operated
gaming facilities on Indian reservations for the mob. He advised that
certain Indian gaming operations were financed and controlled by
Anthony Acceturo, a made member of the LCN. He stated that in order
for the mob to nold their control over the Indians, three dissenting
tribal leaders were killed. Subsequently, the mob had no problems
getting the tribal leadership to fall in line.
In testimony before the US Senate on February 8, 1989, a witness,
under the Witness Protection Program, testified that he skimmed money
for the Luchese family on the Barona reservations. He testified as an
example that a $5800 jackpot on the Barona reservation was "won" by an
employee of the paper supplier to the reservation in a rigged game.
He testified that Indian Bingo is open territory for the mob. He
stated the mob is involved in laundering money through Indian
Reservations. He stated he had personal knowledge of twelve Indian
Gaming operations directly controlled by the mob.
ABC's Morton Dean recently filmed Eddie Somuna as he was managing
the Viejas tribal gambling hall in California. Somuna was convicted
of felony gambling crimes in Detroit and is an alleged mob associate.
In the meantime, there is no federal control of Indian Gaming
operations. My sources on Indian reservations state that nothing has
changed. The Indian Gaming Industry is wide open, with no control.
Business as usual, the mob and corrupt tribal leaders get the gold
mine and the tribal members get the shaft.
####
353
Mr. Abercrombie. Thank you very much.
Mr. Elroy, you mentioned in your testimony that you worked for
the Select Committee on Indian affairs. Inasmuch as the law was
passed in 1988, and in effect, came into being in — for effective oper-
ation in 1989, did you — ^you mentioned here about what happened
during the 1980s. Does most of your investigatory activity concern
gaming activities prior to the passage of the act or the implementa-
tion, is inadequate, as you characterize it?
Mr. Elroy. I would say that is accurate. In 1989, we were look-
ing at this, and the Indian Gaming Commission actually was cre-
ated by law at that time, but they were not operational. But my
point is that assuming that the Indian Gaming Commission desires
to do the job, which I would have no reason to believe they
wouldn't, I have some idea of what it takes to have oversight of
those type of operations.
Mr. Abercrombie. Did you say you are retired?
Mr. Elroy. Yes, sir.
Mr. Abercrombie. Well then, you might be available at this
stage, at least, to consult or something of that nature?
Mr. Elroy. I have done some
Mr. Abercrombie. I don't mean that lightly, in other words, I get
the thrust of your testimony.
Mr. Elroy. You can't do it with 30 people, sir.
Mr. Abercrombie. I understand that. Did you have an oppor-
tunity to investigate, at that time, what the potential compact ar-
rangements might be, or have you had an opportunity to look at
the compact arrangements since then?
Mr. Elroy. I have looked at some of them. However, the problem
with the compact arrangements, as has been pointed out, is that
there is very little uniformity. I think it is even for the State to get
involved. There is a myriad of constitutional questions that deal
with the State enforcing the law on these Indian reservations.
Mr. Abercrombie. What about the point that was raised during
the testimony of Mr. Palmer, the IRS, and the Department of Jus-
tice, that the State of Nevada has at least what purports to be a
parallel system of auditing and investigation upon which the Fed-
eral Government relies, and more particularly, the IRS, and that
they are now about to undergo at least some joint operations.
I presume they will take selected, random audits and go over
them jointly. What would you think about that kind of a proposal,
that a similar kind of arrangement be put into effect with the var-
ious— within the various compacts, within the various States that,
at a minimum, the tribes — and it had also been suggested in other
testimony — that the tribes would be willing to put together the
tribal version of the Nevada arrangement and work with the Fed-
eral Government?
Mr. Elroy. I think that certainly the State could cooperate with
the Federal Government, if there was an enabling legislation to
allow them to do that, and in conjunction with sufficient Federal
oversight that you might accomplish your task.
Mr. Abercrombie. Would you agree that it is in the interests of
the tribes to have a crime-free atmosphere, within their interests,
certainly, to be able to address from a public perception point of
354
view, that they are attacking this issue vigorously and without any
reservation?
Mr. Elroy. It has been my experience in deaUng on the Indian
reservations with the Indian people that they are absolutely op-
posed to corruption and organized crime on the reservation. I don't
remember anybody telling me they wanted that there. And they
are — and we are talking about the rank-and-file Indian people,
where they would be very supportive of any type of oversight that
would keep that type of corruption out and would return the mon-
ies to the benefit of the Indian people.
This does not mean that there aren't some officials within the
tribe that don't want to see any of this oversight.
Mr. Abercrombie. That would be the case in almost any enter-
prise; right?
Mr. Elroy. Probably so.
Mr. Abercrombie. What I am looking for here, for the purposes
of our legislative activity, is solutions to these kinds ever difficul-
ties, and so I would think — my conclusion from your testimony is
that the route for us to pursue legislatively is to see that adequate
enforcement personnel are made available and that the compacts
are such that whatever State or whatever other agency is involved
in the enforcement side is that they be coordinated in such a way
as to see to it that the tribes are not disadvantaged?
Mr. Elroy. Yes, sir.
Mr. Abercrombie. Very good. Thank you very much.
STATEMENT OF MICHAEL BROWN
Mr. Abercrombie. Mr. Brown, you are president and CEO of a
casino in Connecticut, right?
Connecticut has been brought up so many times today, I am
sorry that you are at the end of the testimony, but perhaps that
is all to the good because you had an opportunity to hear a full
range of discussion about Connecticut.
I believe you are accompanied by Lieutenant Colonel Root of the
State police.
Mr. Brown. That is correct.
Mr. Abercrombie. Then we will have Mr. Johnson and Mr. Pow-
ell from Minnesota.
But why don't we go to Connecticut then, Mr. Brown and Mr.
Root, perhaps you might want to combine your testimony.
Mr. Brown. I will give some comments, then Lieutenant Colonel
Root will answer questions, if there are any.
Mr. Abercrombie. Very good. Thank you very much for your pa-
tience.
Mr. Brown. Thank you for waiting to listen to us.
Mr. Chairman, I serve as the President and Chief Executive Offi-
cer of Foxwoods Casino, which is located in southeast Connecticut.
It is owned and operated by the Mashantucket Pequot Tribe, and
I emphasize "operated" because there is no management company.
We are all employees of the tribe.
I previously served as a prosecutor for the New Jersey Attorney
Genersd's office for nine years, and before that, served for two years
as a Director of the Division of Gaming Enforcement in New Jer-
sey. And with the tribe, entered into the compact negotiation proc-
355
ess with the State of Connecticut in May of 1990, they hired me
as an attorney to assist them in developing a strict regulatory coop-
erative effort between the Mashantucket Pequot TYibe and the
State of Connecticut.
I will dispense with any prepared remarks and just try to sum-
marize for you why we believe that although Foxwoods is the larg-
est casino in the United States and it is probably the most finan-
cially successful casino in the United States, it is also the most
highly regulated casino in the United States.
To my right is a chart which lists some of the regulations that
are put in place under the compact that we agreed to with the
State of Connecticut. We are regulated basically by four agencies:
The first agency is the Mashantucket Pequot Tribal Gaming Com-
mission, which supervises the on-site regulation and compliance
with the internal controls in the casino.
Behind me is George Henningsen, who is the Chairman of the
Mashantucket Pequot Tribal Gaming Commission, and for five
years before that, he served as the Deputy Director of Gaming En-
forcement in the State of New Jersey. We imported a lot of help.
The Division of Special Revenue is the agency, the State agency,
which licenses all people who work in the gaming industry in the
State of Connecticut, and by compact they must license every per-
son before they can work in Foxwoods Casino. I am licensed by the
State of Connecticut.
Once we file a license application with the State of Connecticut,
it is turned over to the Connecticut State Police that do a back-
ground investigation on the applicant. They report back to Special
Revenue, and the State of Connecticut Special Revenue determines
whether or not to issue a gaming license. They have absolute au-
thority over licensing gaming employees.
The Connecticut State Police by compact have the authority to
enforce all of the criminal statutes of the State of Connecticut in
and around the casino. They also assign Connecticut State Police
inside the facility 24 hours a day, something that does not exist in
any other casino in the United States.
Mr. Abercrombie. Mr. Brown.
Mr. Brown. Yes.
Mr. Abercrombie. I have something I have to take care of at a
quarter to three, which is right now. If you would — and the rest of
the panel, would excuse me for just a few minutes, that can be
handled, and I will be right back.
I am sorry there are no other Members to be able to shift to, so
if we could call a recess for five minutes.
Mr. Brown. Thank you.
[Recess.]
Mr. Abercrombie. Mr. Brown, please accept my apologies. We
have been able to work things out. We did not anticipate the length
of today's hearing, so a whole lot of adjustments had to be made,
and I am sure, including you folks on the panel. I am very grateful
for your patience.
Please continue.
Mr. Brown. I will be brief.
After the employees are licensed by the Division of Special Reve-
nue, they are allowed to go to work. We also had State liquor con-
356
trol agents on site during all hours of dispensing of alcohol in the
facility. We pay the entire cost of the State regulatory efforts in our
facility, which fiscal year 1994 is going to equal $3.8 million.
With regard to the contributions that we make to the community,
we employ, as of last Friday, we handed out paychecks for 7,150
people. Eighty percent of those people live in the State of Connecti-
cut. Those are jobs that did not exist before.
We have an annualized payroll and benefit package cost of $202
million a year. In January of this year, the State of Connecticut
needed some additional money for their treasury, and the tribe
wished to implement slot machines, which did not previously exist.
By a two-page written agreement between the Governor of the
State of Connecticut and the Chairman of the Mashantucket
Pequot Tribe, we agreed to guarantee a contribution of $100 mil-
lion a year to the State of Connecticut out of our slot revenues, or
25 percent of our revenue, whichever is greater. There is no casino
in the United States that gives $100 million a year off the top to
the State in which that casino is located.
We have — the tribe has utilized most of the revenue from the ca-
sino to finish an expansion and pay for the original building and
a second casino hotel entertainment complex which is going to open
up between now and November 1st. It has also a state-of-the-art
child development center. It is using funds to build a Native Amer-
ican museum. It has a full health service for tribal members, hous-
ing for tribal members, fire department, emergency medical serv-
ices, which serves not only the reservation but the surrounding
communities. It has a college tuition fund for any tribal men that
wishes to advance themselves further in education.
We think that the Indian Gaming Regulatory Act has been a suc-
cess for the Mashantucket Pequot Tribe and the community sur-
rounding that reservation and for the State of Connecticut.
Thank you.
Mr. Abercrombie. Thank you very much,
[Prepared statement of Mr. Brown follows:]
357
TESTIMONY
OF
G. Michael Brown, Esquire
President & Chief Executive Officer
Foxwoods Casino, Mashantucket Pequot Nation
on
INDIAN GAMING LAW ENFORCEMENT
before the
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
of the
HOUSE COMMITTEE ON NATURAL RESOURCES
on
October 5, 1993
358
TESTIMONY
of
G. Michael Brown, Esquire
President and Chief Executive Officer
Foxwoods Casino, Mashantucket Pequot Nation
on
INDIAN GAMING LAW ENFORCEMENT
before the
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS
of the
HOUSE COMMITTEE ON NATURAL RESOURCES
on
October 5, 1993
GOOD MORNING MR. CHAIRMAN. I AM MICKEY BROWN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER FOR FOXWOODS CASINO, WHICH IS OWNED
AND OPERATED BY THE MASHANTUCKET PEQUOT TRIBE IN LEDYARD,
CONNECTICUT. THE PEQUOTS ARE A SMALL BUT AMBITIOUS TRIBE WITH
APPROXIMATELY 280 MEMBERS, LOCATED IN SOUTHEASTERN
CONNECTICUT. PREVIOUSLY, I SERVED AS A PROSECUTOR FOR NINE YEARS
IN THE NEW JERSEY ATTORNEY GENERAL'S OFFICE, AND FOR TWO YEARS
AS DIRECTOR OF THE DIVISION OF GAMING ENFORCEMENT IN NEW JERSEY,
WHERE WE DEVELOPED WHAT WE BEUEVE IS A MODEL FOR REGULATING
CASINO GAMBLING. I HAVE ALSO ASSISTED A NUMBER OF OTHER
JURISDICTIONS IN SETTING UP REGULATORY SYSTEMS, MOSTLY IN
AUSTRALIA. THE TRIBE ASKED ME TO SERVE AS HRST CHAIRMAN OF
THEIR TRIBAL REGULATORY AGENCY, WHICH I DID UNTIL JANUARY OF
1993 WHEN I BECAME FOXWOODS' PRESIDENT AND CHIEF EXECUTIVE
OFHCER. THE TRIBE ALSO HIRED GEORGE HENNINGSEN, WHO FOR THE
PREVIOUS FIVE YEARS HAD SERVED AS DEPUTY DIRECTOR OF THE
DIVISION OF GAMING ENFORCEMENT IN NEW JERSEY. GEORGE SERVES AS
THE FULL-TIME EXECUTIVE DIRECTOR OF OUR TRIBAL GAMING
COMMISSION. ACCOMPANYING ME IS MR. GEORGE HENNINGSEN,
EXECUTIVE DIRECTOR OF THE MASHANTUCKET PEQUOT TRIBAL GAMING
COMMISSION AND LT. COLONEL ROBERT ROOT OF THE CONNECTICUT
STATE POUCE. AT THE END OF THIS TESTIMONY, WE WILL BE HAPPY TO
RESPOND TO ANY QUESTIONS YOU MAY HAVE. FOLLOWING IS MY
TESTIMONY WHICH I SUBMIT ON BEHALF OF THE MASHANTUCKET PEQUOT
TRIBE AND FOXWOODS CASINO.
INDIAN GAMING REGULATORY ACT -IN SEPTEMBER, 1988. THE UNITED
359
STATES CONGRESS CONSIDERED AND PASSED THE INDIAN GAMING
REGULATORY ACT ("ACT"). THE ACT DEFINES THE RIGHTS OF INDIAN
TRIBAL GOVERNMENTS TO CONDUCT GAMING ACTIVITIES ON THEIR
FEDERALLY RECOGNIZED RESERVATIONS. THE ACT WAS THE RESULT OF
SEVERAL YEARS OF DISCUSSION AND NEGOTIATIONS BETWEEN INDIAN
TRIBES, STATES, THE GAMING INDUSTRY, THE ADMINISTRATION, AND THE
CONGRESS IN AN ATTEMPT TO FORMULATE A SYSTEM FOR REGULATING
GAMING ON INDIAN LANDS. THE ACT SETS UP A SYSTEM OF JOINT
REGULATION BY TRIBES AND THE FEDERAL GOVERNMENT FOR CERTAIN
GAMING ON INDIAN LANDS AND A SYSTEM FOR COMPACTS BETWEEN
TRIBES AND STATES FOR REGULATION OF CASINO GAMING.
NUMEROUS INDIAN TRIBES THROUGHOUT THE UNITED STATES HAVE
ENTERED INTO COMPACTS TO CONDUCT CLASS III TYPE GAMING
ACTIVITIES. TO DATE, 78 TRIBAL STATE COMPACTS HAVE BEEN APPROVED
BY THE SECRETARY OF THE INTERIOR TO ALLOW TRIBES SOME FORM OF
CLASS III GAMING. ELEVEN SUCH COMPACTS HAVE BEEN APPROVED IN THE
STATE OF MINNESOTA, FOUR IN CALIFORNIA, PLUS WASHINGTON, NEVADA,
NEBRASKA, SOUTH DAKOTA AND CONNECTICUT. ADDITIONALLY, SEVEN (7)
COMPACTS HAVE BEEN SIGNED BY THE GOVERNOR OF MICHIGAN AND ARE
NOW PENDING LEGISLATIVE APPROVAL.
AS YOU KNOW FROM PREVIOUS HEARINGS, MINNESOTA ALONE HAS
A DOZEN TRIBES ENGAGED IN GAMING IN MOSTLY MID-SIZE CASINOS
OFFERING ONLY BLACKJACK AND VIDEO MACHINES. RELATIONS BETWEEN
THE VARIOUS TRIBES AND THE STATE OF MINNESOTA HAVE BEEN VERY
COOPERATIVE RESULTING IN ENORMOUS FINANCL\L SUCCESS (ESTIMATED
THAT GAMING REVENUES ON RESERVATIONS IN MINNESOTA HAVE
REACHED IN EXCESS OF $300 MILUON ANNUALLY), THE EUMINATION OF
UNEMPLOYMENT AND THE DEVELOPMENT OF COMMUNITY CENTERS,
HEALTH CARE CENTERS AND SCHOOLS. MANY, MANY OTHER TRIBES
THROUGHOUT THE UNITED STATES UMIT THEIR GAMING ACTIVITIES TO
BINGO AND BINGO RELATED GAMES UNDER CLASS U AND THEREFORE DO
NOT HAVE A NEED TO NEGOTIATE A TRIBAL STATE COMPACT.
MASHANTUCKET PEOUOT NATION'S EXPERIENCE - LET ME OFFER
SOME BACKGROUND ON HOW THE MASHANTUCKET PEQUOT TRIBE
ENTERED INDIAN GAMING. THE TRIBE OCCUPIES A RESERVATION OF
APPROXIMATELY 1200 ACRES IN THE ROLLING HILLS OF SOUTHEASTERN
CONNECTICUT, ABOUT 45 MILES EAST OF HARTFORD AND 25 MILES SOUTH
OF PROVIDENCE, RHODE ISLAND. THE TRIBE OPENED A HIGH STAKES
BINGO HALL IN 1986 IN AN EFFORT TO SUPPLEMENT ITS STATE AND
FEDERAL FUNDING AND INCOME FROM A SMALL SAND & GRAVEL
OPERATION. THE TRIBE INITIALLY EMPLOYED ANOTHER INDIAN TRIBE TO
360
ASSIST IN MANAGING THE HALL, AND AFTER TWO YEARS, PEQUOT TRIBAL
MEMBERS ASSUMED FULL RESPONSIBIUTY FOR MANAGEMENT. THE
OPERATION WAS A FINANCIAL SUCCESS AND WON WIDESPREAD RESPECT
IN CONNECTICUT FOR ITS STYLE AND PROFESSIONALISM. THE TRIBE
STARTED THE BINGO HALL WITH ASSISTANCE FROM A LOAN GUARANTEE
BY THE BUREAU OF INDIAN AFFAIRS. THAT LOAN WAS REPAID IN FULL IN
1991, AHEAD OF TIME, AND THE GUARANTEE RETURNED TO THE BUREAU.
(THE BINGO OPERATION NOW GROSSES $20 MILLION PER YEAR AND NETS
ABOUT $4 MILLION ANNUALLY.)
SHORTLY AFTER THE INDIAN GAMING REGULATORY ACT PASSED,
THE TRIBE ASKED CONNECTICUT TO ENTER NEGOTIATIONS FOR A TRIBAL-
STATE COMPACT. AS CONNECTICUT PERMITS GAMES OF CHANCE, ALBEIT
IN A HIGHLY REGULATED FORM, SUCH GAMING IS NOT IN CONFLICT WITH
THE STATE'S PUBLIC POLICY. CONNECTICUT PERMITS MANY FORMS OF
GAMBLING. SUCH AS A STATE-OPERATED LOTTERY, BINGO, JAI ALAI AND
VARIOUS FORMS OF PARI-MUTUEL BETTING ON HORSES AND DOG RACES.
LARGE AMOUNTS MAY BE BET AND SUBSTANTIAL WINNINGS ARE
PERMITTED. CONNECTICUT REGULATES, RATHER THAN PROHIBITS,
GAMBLING IN GENERAL AND GAMES OF CHANCE IN PARTICULAR.
CONNECTICUT PERMITS ANY NONPROFIT ORGANIZATION, ASSOCIATION OR
CORPORATION TO PROMOTE AND OPERATE GAMES OF CHANCE, OR LAS
VEGAS NIGHTS, TO RAISE FUNDS FOR THE PURPOSES OF SUCH
ORGANIZATIONS, SUBJECT TO CERTAIN LIMITATIONS AND RESTRICTIONS,
SUCH AS LIMITS ON THE SIZE OF WAGERS, CHARACTER OF PRIZES, AND
FREQUENCY OF OPERATION. CONNECTICUT ANNOUNCED THAT IT WOULD
NOT NEGOTIATE AT ALL ABOUT CASINO GAMES, EVEN THOUGH SUCH
GAMES WERE PERMITTED AT CHARITABLE LAS VEGAS NIGHTS AND
CARNIVALS, AND EVEN THOUGH CONNECTICUT REGULATES MORE THAN
$1 BILUON ANNUALLY IN OTHER LEGAL WAGERING ACTIVITIES. THE TRIBE
FILED SUIT IN 1989 TO FORCE THE STATE TO NEGOTIATE. THE U.S. DISTRICT
COURT RULED IN MAY OF 1990 THAT CONNECTICUT WAS OBUGATED TO
BARGAIN OVER ALL ISSUES, INCLUDING CASINO GAMES.
FOLLOWING THAT INITIAL COURT DECISION, THE TWO SIDES SAT
DOWN IN THE SUMMER OF 1990 TO WORK OUT A COMPACT. THE TRIBE
ASKED ME TO ASSIST THEM IN THESE NEGOTIATIONS BECAUSE OF MY OWN
EXPERIENCE IN LAW ENFORCEMENT AND GAMING REGULATION.
DURING THE SUMMER OF 1990. WE ENGAGED IN INTENSIVE, EARNEST
BARGAINING WITH CONNECTICUT STATE OFnCL\LS TO WORK OUT A
COMPACT. THE TRIBE WAS WILLING TO ACCEPT, AND IN FACT
ENCOURAGED, A SUBSTANTIAL STATE ROLE IN HELPING TO REGULATE
GAMING ON THE RESERVATION. IN RETURN, WE ASKED THE STATE TO
361
ACCEPT THE TRIBE'S GOAL OF A COMPACT WHICH WOULD ALLOW FOR A
SINGLE, SUBSTANTIAL ECONOMIC ENTERPRISE BASED ON CASINO GAMING.
IN THE END, WE REACHED NEARLY COMPLETE AGREEMENT ON A COMPACT
WHICH PERMITTED THE TRIBE TO ESTABLISH A FULL-SCALE CASINO, AND
TRIBAL GAMING REGULATORY AGENCY, WHILE THE STATE RETAINED
POWER TO LICENSE ALL CASINO EMPLOYEES AND GAMING SUPPLIERS, AND
TO POLICE THE CASINO ITSELF.
FOX WOODS' REGULATION/LAW ENFORCEMENT - PURSUANT TO THE
COMPACT, THE CONNECTICUT STATE POLICE HAVE JURISDICTION TO
ENFORCE ALL CONNECTICUT CRIMINAL LAWS ON THE RESERVATION,
INCLUDING ENFORCEMENT WITHIN THE CASINO. THE STATE POLICE HAVE
ACCESS TO ALL LOCKED AND SECURED AREAS OF THE GAMING FACILITY
AND MAY STATION TROOPERS AT THE GAMING FACILITY TO COORDINATE
LAW ENFORCEMENT IN AND AROUND THE CASINO. THE CONNECTICUT
STATE POLICE MAY UNDERTAKE SUCH INVESTIGATION OF GAMING
EMPLOYEES AND NON-GAMING EMPLOYEES AS IT DEEMS APPROPRIATE
AND SHALL ALSO INVESTIGATE THE BACKGROUNDS OF GAMING SERVICE
APPLICANTS. THEY ARE STATIONED ON PROPERTY 24 HOURS A DAY. THE
COMPACT COMMITTED THE TRIBE TO FUNDING THE STATE COST OF
REGULATION, FOLLOWING THE NEW JERSEY SYSTEM. THE STATE AND THE
TRIBE AGREED TO SUBMIT NEARLY MATCHING PROPOSALS TO A COURT-
APPOINTED MEDIATOR SO THAT THE COMPACT COULD BE IMPLEMENTED
BY THE INTERIOR DEPARTMENT, WITHOUT LIMITING THE STATE'S RIGHT
TO APPEAL THE ORIGINAL COURT DECISION. THE STATE DID APPEAL, BUT
THE DISTRICT COURT WAS UPHELD BY A UNANIMOUS SECOND CIRCUIT
DECISION, AND THE U.S. SUPREME COURT DENIED CERTIORARI IN APRIL OF
1991.
UNDER THE COMPACT, THE TRIBE AGREED TO ESTABLISH A
REGULATORY COMMISSION TO ENFORCE A DETAILED SYSTEM OF
MANAGEMENT CONTROLS AND OVERSIGHT. THE TRIBAL GAMING AGENCY,
THE MASHANTUCKET PEQUOT GAMING COMMISSION, WAS CREATED BY
TRIBAL ORDINANCE ON FEBRUARY 25, 1991. THE TRIBAL GAMING
COMMISSION HAS THE PRIMARY RESPONSIBILITY FOR ON-SITE REGULATION
OF THE GAMING OPERATION AND UTILIZES NON-UNIFORM INSPECTORS
WHO ARE PRESENT IN THE GAMING FACILITY DURING ALL HOURS OF
OPERATION AND WHO ARE ACCOUNTABLE ONLY TO THE TRIBAL GAMING
AGENCY. TRIBAL GAMING INSPECTORS ARE LICENSED TO THE SAME
STANDARD AS GAMING EMPLOYEES BY THE STATE GAMING AGENCY. THE
TRIBAL GAMING AGENCY MUST DISCLOSE TO THE STATE GAMING AGENCY
THE PROGRAM OF INSTRUCTIONAL AND ON-THE-JOB TRAINING, SYSTEM OF
INTERNAL ORGANIZATION INCLUDING A COMPENDIUM OF ALL POSITIONS
FOR DEALERS AND SUPERVISORY POSITIONS IN EACH TABLE GAME. THE
362
TRffiAL GAMING COMMISSION MUST ENSURE THE PROPER TRAINING AND
QUALIFICATIONS FOR EACH PERSON OCCUPYING A DESIGNATED POSITION
IN THE GAMING FACILITY. THE COMMISSION HAS APPROVED AND ADOPTED
STANDARDS OF OPERATION AND MANAGEMENT. THE INITIAL STANDARDS
OF OPERATION AND MANAGEMENT ARE INCLUDED IN THE COMPACT AS
APPENDIX A.
THE COMMISSION MAINTAINS SURVEILLANCE, SECURITY, CASHIER
CAGE, CREDIT, AND COMPLIMENTARY SERVICES LOGS WHICH SHALL BE
MADE AVAILABLE TO THE STATE GAMING AGENCY UPON REQUEST. THE
COMMISSION MAINTAINS A LIST OF PERSONS BARRED FROM THE GAMING
FACILITY BECAUSE OF THEIR CRIMINAL HISTORY OR ASSOCIATION WITH
CAREER OFFENDERS, INCLUDING THE NEVADA AND NEW JERSEY BLACK
LISTS. THE COMMISSION APPROVES RULES OF EACH GAME AND NOTIFIES
THE STATE GAMING AGENCY OF ANY CHANGES.
GEORGE HENNINGSEN AND I HAVE BEEN MEETING WITH THE STATE
POLICE, THE F.B.I. , AND OTHER FEDERAL, STATE AND LOCAL LAW
ENFORCEMENT AGENCIES TO COORDINATE A LAW ENFORCEMENT
STRATEGY TO MAKE SURE THE CASINO IS AS RIGOROUSLY CONTROLLED
AS ANY GAMING ENTERPRISE IN THE WORLD. THE COMMISSION HAS ALSO
BEEN CONSULTING WITH THE STATE AGENCIES TO REACH CONSENSUS ON
THE RESOURCES NEEDED BY THE STATE TO ADEQUATELY POLICE THE
CASINO AND INVESTIGATE THE BACKGROUNDS OF CASINO EMPLOYEES.
ON FEBRUARY 15, 1992 THE MASH ANTUCKET PEQUOT NATION OPENED
THE LARGEST TRIBAL GAMING ENTERPRISE IN THE UNITED STATES
ESTABUSHED UNDER THE ACT AND IT HAS NOT CLOSED SINCE OPENING
DAY. THE FOXWOODS CASINO CURRENTLY EMPLOYS 6,720 PEOPLE, 80% OF
WHOM ARE CONNECTICUT RESIDENTS. THE FOXWOODS CASINO HAS BEEN
CONSTRUCTED AT A COST OF $210 MILLION WITH AN ADDITIONAL $37
MILLION FOR FURNITURE, FIXTURES AND EQUIPMENT. BUILT ADJACENT
TO THE EXISTING BINGO HALL, THE CASINO COMPLEX HAS TWO
RESTAURANTS, A BUFFET, A TRIBAL GIFT SHOP, A 175 ROOM HOTEL AND A
GAMING AREA OF 139,000 SQUARE FEET, IN WHICH 233 TABLE GAMES AND
3,137 SLOT MACHINES ARE LOCATED. THE AVERAGE DAILY DROP IS $4.4
MILLION WITH A WIN AVERAGING $1,625 MILLION PER DAY FOR ALL
GAMING.
WITH BROAD SUPPORT FROM LOCAL BUSINESS AND LABOR LEADERS,
THE TRIBE HAS PLAYED A MAJOR ROLE IN REBUILDING THE SAGGING
ECONOMY OF SOUTHEASTERN CONNECTICUT, WHICH HAS BEEN
SUBSTANTIALLY DEPENDENT ON DEFENSE SPENDING IN RECENT YEARS.
THIS GROWTH AND REBUILDING PROCESS WILL CONTINUE AS THE TRIBE
363
OPENS ITS NEW 312 ROOM HOTEL, TWO NEW RESTAURANTS, 15 RETAIL
SHOPS, HEALTH CLUB, POOL, SPA, BEAUTY SALON, TURBO RIDE. 360
THEATER AND 1,500 SEAT SHOWROOM THIS NOVEMBER.
COVERING COSTS FOR TRIBAL/STATE REGULATION - THE CHAIRMAN
OF THE TRIBE, RICHARD HAYWARD, AND CONNECTICUT GOVERNOR
LOWELL P. WEICKER HAVE SIGNED A MEMORANDUM OF UNDERSTANDING
WHICH COMMITS THE TRIBE TO FUND $1.3 MILLION IN STATE
EXPENDITURES FOR CASINO REGULATION . DURING THE FIRST SIX MONTHS
OF OPERATION. THE COST OF CONNECTICUT STATE POLICE ON-SITE
SERVICES FOR THEIR FISCAL YEAR 1993 PAID BY THE TRIBE WAS $1,826,000.
THIS IS IN ADDITION TO THE REGULATORY COST OF $535,879.00 PAID TO
CONNECTICUT SPECIAL REVENUE DIVISION FOR FY 93 AND $344,000.00PAID
TO THE CONNECTICUT LIQUOR CONTROL DIVISION FOR COSTS OF AGENTS
WORKING ON-SITE DURING ALL HOURS THAT UQUOR IS SERVED.
ANTICIPATED REGULATORY COSTS TO BE PAID BY THE TRIBE TO THE
STATE IN FISCAL YEAR 1994 ARE AS FOLLOWS:
CONNECTICUT STATE POLICE - $2,339,916;
CONNECTICUT SPECIAL REVENUE DIVISION - $1,002,691 AND
CONNECTICUT LIQUOR CONTROL -$623,529
TOTAL -$3,966,136.00
COSTS FOR TRAFFIC CONTROL ARE ALSO BORNE BY THE TRIBE. OFF
DUTY CONNECTICUT STATE POLICE SERVE AS TRAFFIC CONTROL OFFICERS
FOR FOXWOODS WHICH IS LOCATED ON ROUTE 2 IN LED YARD,
CONNECTICUT. TRAFFIC CONTROL COSTS FOR THE STATE'S FISCAL YEAR
1993 AMOUNTED TO $950,000. FISCAL YEAR 1994 ESTIMATES FOR THOSE
EXPENSES ARE ANTICIPATED AT $1.5 MILLION.
THE TRIBE WILL NOT EMPLOY ANY MANAGEMENT COMPANY TO
OPERATE THE CASINO. FOLLOWING THE MODEL WHICH IT USED
SUCCESSFULLY TO MANAGE ITS BINGO HALL, THE TRIBE'S CASINO
EXECUTIVES WILL SERVE AS EMPLOYEES OF THE TRIBAL COUNCIL. THE
TRIBE ORIGINALLY HIRED ALFRED LUCIANI TO SERVE AS CHIEF
EXECUTIVE OF ITS GAMING PROJECT; MR. LUCIANI WAS IN THE NEW JERSEY
ATTORNEY GENERAL'S OFFICE FOR TEN YEARS, AND HELPED WRITE THE
CASINO CONTROL ACT IN NEW JERSEY. AFTER LEAVING GOVERNMENT, HE
ENTERED GAMING MANAGEMENT AND SUCCESSFULLY MANAGED THE
GOLDEN NUGGET IN NEW JERSEY AND NEVADA AND RESORTS
INTERNATIONAL CASINO IN ATLANTIC CITY. THE TRIBE PICKED MR.
LUCIANI BECAUSE OF HIS IMPECCABLE REPUTATION FOR INTEGRITY, AS
WELL AS HIS EXPERTISE. HE ASSEMBLED A TALENTED EXECUTIVE TEAM
364
INCLUDING BOTH TRIBAL MEMBERS AND NON-MEMBERS, AND THE TRIBE
HAS TRAINED LOCAL RESIDENTS TO FILL SKILLED POSITIONS IN THE CASINO
AND HOTEL PROPERTIES.
FOXWOODS' ECONOMIC IMPACT -THE PEQUOTS' SUCCESS IS A MODEL
OF EFFECTIVE IMPLEMENTATION OF THE INDIAN GAMING REGULATORY
ACT. WE HAVE A SOUND REGULATORY SYSTEM IN PLACE. INDEED, WE
HAVE PERHAPS THE MOST HIGHLY REGULATED CASINO IN THE INDUSTRY,
UTIUZING THE CONNECTICUT STATE POLICE, LIQUOR CONTROL AND
SPECIAL REVENUE AGENTS. THIS IS A FIRST CLASS GAMING ENTERPRISE.
IT HAS PRODUCED THOUSANDS OF JOBS IN THE SURROUNDING
COMMUNITY, AND TENS OF MILLIONS IN PAYROLL AND SERVICES. IN THE
MEMORANDUM OF UNDERSTANDING BETWEEN THE PEQUOTS AND THE
STATE OF CONNECTICUT, SIGNED JANUARY 13, 1993, THE TRIBE AGREED TO
PAY THE STATE $100,000,000 AND RECEIVED EXCLUSIVITY FOR THE RIGHT
TO OPERATE SLOT MACHINES AT FOXWOODS. THE STATE IS FREE, AT ANY
TIME, TO INTRODUCE SLOT MACHINES ELSEWHERE IN THE STATE BUT IF
THAT HAPPENS, THE TRIBE DISCONTINUES THE SLOT REVENUE SHARING.
ADDITIONALLY, WHEN THE STATE OF CONNECTICUT WAS SHORT $13,000,000
TO BALANCE THEIR BUDGET THIS PAST YEAR, THE TRIBE KICKED IN THE
NECESSARY AMOUNT IN ORDER TO ASSIST THE STATE GOVERNMENT.
UNDOUBTEDLY, THE MASHANTUCKET PEQUOT TRIBE IS THE LARGEST
CONTRIBUTOR TO THE STATE OF CONNECTICUT'S COFFERS AT THIS POINT
IN TIME. FOXWOODS WILL ENABLE THE TRIBE TO BECOME AN ECONOMIC
LEADER IN ITS REGION, AND TO REAUZE ITS OWN GOAL OF CREATING AN
IMPORTANT RESORT CENTER, HIGHLIGHTED BY A MAJOR MUSEUM AND
RESEARCH CENTER ON AMERICAN INDL^lN HISTORY AND CULTURE.
A QUESTION FREQUENTLY ASKED IS IF TRIBES CANNOT PLEDGE
ASSETS AS COLLATERAL, HOW CAN THEY OBTAIN CONSTRUCTION
FINANCING. ALMOST ALL TRIBES HAVE TO LOOK OFF SHORE AS THE
PEQUOTS DID. INDL\N TRIBES HAVE THE RIGHT TO ISSUE TAX FREE
MUNICIPAL TYPE BONDS. ALTHOUGH A TRIBE CANNOT MORTGAGE LAND
HELD IN FEDERAL TRUST, THEY CAN PLEDGE ASSETS, THE BUILDING FF&E
AS SECURITY FOR A LOAN, AND THEY CAN PLEDGE A SUCCESS FEE IN
ADDITION TO BASE INTEREST. DURING THE MASHANTUCKET PEQUOT
SEARCH FOR HNANCING WHICH INCLUDED PRESENTATION TO MORE THAN
23 BANKING INSTITUTIONS IN THE UNITED STATES, OUR ONLY OTHER
POSSIBLE SOURCE FOR HNANCING WAS A FOREIGN LONG TERM CREDIT
BANK. OUR RELATIONSHIP HAS BEEN FRUITFUL AND WAS BUILT ON TRUST.
THE NEW CASINO EXPANSION WHICH OPENED SEPTEMBER 3, 1993, WAS
BUILT PRIMARILY OUT OF CASH FLOW NEGATING THE NEED TO LOOK FOR
ALTERNATIVE FINANCING. PROFITS FROM FOXWOODS PAY FULL COLLEGE
TUITION FOR MASHANTUCKET PEQUOT TRIBAL MEMBERS, PROVIDE
365
QUAUTY HOUSING, A STATE OF THE ART CHILD DEVELOPMENT CENTER,
A TRIBAL POLICE DEPARTMENT, EMERGENCY MEDICAL SERVICES
DEPARTMENT, TRIBAL TORT COURT, PARKS AND RECREATION
DEPARTMENT, TRIBAL LOAN PROGRAM, SUPPLEMENTS THE TRIBAL HEALTH
AND SOCIAL SERVICES DIVISION AND PROVIDES A HOST OF OTHER
SERVICES.
FOR TRIBES ACROSS THE UNITED STATES THE ACT IS PROVIDING THE
MOST EFFECTIVE BOOST TO TRIBAL ECONOMIC DEVELOPMENT OF ANY
STRATEGY ATTEMPTED BY THE FEDERAL GOVERNMENT.
IF YOU WISH TO EXPERIENCE FIRST HAND THE ULTIMATE SUCCESS
STORY OF INDIAN GAMING AND THE BENEFITS ENJOYED BY THE TRIBE,
THE COMMUNITY AND THE STATE, WE INVITE YOU TO VISIT FOXWOODS.
366
NEVADA FOXWOODS NEW JERSEY
Mandatory licensure
for all Casino employees NO YES YES
Federal regulatory
oversight NO YES NO
Mandatory regulatory
oversight during all
hours of operation NO YES YES
On site police presence
during all hours of
operation NO YES NO
Liquor Control agents
on site during all hours
alcoholic beverages are
served NO YES NO
Exhaustive State back-
ground investigation of
all Casino executives NO YES YES
Mandatory yearly audit
by outside auditing firm NO YES YES
367
THE ECONOMIC IMPACTS
OF THE FOXWOODS HIGH STAKES BINGO & CASIWO
ON NEW LONDON COUNTY AND SURROUNDING AREAS
by
Arthur W. Wright & Associates!
John M. Clapp
Dennis R. Heffley
Subhash C. Ray
Jon Vilasuso
Arthur W. Wright
September 1993
368
TABLE OF CONTENTS
(A) Key Findings and Executive Summary
(B) The Economic Impact of Foxwoods High
Stakes Bingo & Casino on New London
County and Surrounding Areas
Page ii
INTRODUCTION
I. Employment Effects
II. Public Assistance (AFDC)
III. Housing Prices
IV. Summary and Conclusions
Page 1
Page 4
Page 9
Page 11
Page 15
(C) The Impact of a Change in Basic Employment
Within One LMA on House Values in the Same
and Surrounding LMA' s
(D) Economic Base Analysis for New London
County
(E) Determinants of Welfare Dependence
(F) Biographies of Principals
Appendix 1
Appendix 2
Appendix 3
Appendix 4
369
KEY FIHDIHGS AHP EXECUTIVE SUMMARY
THE ECONOMIC IMPACTS OF THE FOXWOODS HIGH STAKES BINGO & CASINO
ON NEW LONDON COUNTY AND SURROUNDING AREAS
by
Arthur W. Wright & Associates;
John M. Clapp
Dennis R. Heffley
Subhash C. Ray
Jon Vilasuso
Arthur W. Wright
September 1993
KEY FINDINGS
" Every new Foxwoods job supports 1.107 additional non-
casino jobs in New London County. At Foxwoods' currently planned
total employment, that will eventually mean more than 20,000
total new jobs in the county, with an annual payroll of nearly
$480 million.
° Every new Foxwoods job supports 0.74 new jobs in the rest
of Connecticut. That will eventually translate into more than
7,000 new jobs, with an annual payroll of more than $214 million.
*• Every new job trims 0.154-0.260 recipients from AFDC
rolls. Thus, employment gains from Foxwoods' activities will
save the State $9. 6-$ 16 million per year.
° Each decline of 1 point in the unemployment rate in
eastern Connecticut is accompanied by a 7.7 percent increase in
the real prices of houses. Foxwoods employment alone could raise
total residential real estate values by almost $1.2 billion by
the end of 1994. Adding indirect employment, the total increase
could come to more than $6 billion by the end of the decade.
370
ECONOMIC IMPACTS OF FOXWOODS
KEY FINDINGS & EXECUTIVE SUMMARY
-2-
EXECUTIVE SUMMARY
The rapid success of Foxwoods High Stakes Bingo & Casino has
brought growing pains to southeastern Connecticut, but it has also
provided new jobs paying an average of $25,000 per year and another
$9,300 a year in fringes. That success has also afforded direct
material benefits to the casino's owner (the Mashantucket Pequots),
to the State of Connecticut, and to construction firms and workers.
Indirectly, it has helped brighten regional prospects for tourism.
This report deals with three more fundamental indirect impacts
of Foxwoods :
I. additional jobs and incomes in surrounding areas
II. lower spending on public assistance (AFDC)
III. higher real values of single-family houses.
I. Employment and Earnings; Applying economic base analysis,
we estimate that every new Foxwoods job will eventually support
1.107 additional non-casino jobs in New London County. The average
job in the county pays nearly $23,000 (1993 dollars). The combined
effect of the full 9,500 Foxwoods employees expected by early 1994
is 20,017 new jobs in New London County. The total new payroll
generated will be $478.5 million per year.
Further, because county residents spend part of their incomes
on "imports" from other Connecticut counties, we estimate that a
new Foxwoods job ultimately generates as much as a further 0.74 new
job in the rest of the state, where the average job pays about
$30,500 a year. The full 9,500 Foxwoods employees, then, will
support up to an added 7,030 jobs in the rest of the state, with
added payroll of $214.4 million. "Leakages" to other states and
countries will reduce these figures somewhat, but offsetting gains
in those "foreign" areas (especially Rhode Island), in turn meaning
added purchases from Connecticut, will make up much of the
reduction.
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ECONOMIC IMPACTS OF FOXWOODS
KEZ FINDINGS & EXECUTIVE SUMMARY
-3-
II. Aid for Dependent Children; Using econometric techniques
on U.S. state data, we estimate that each additional job created
trims 0.154-0.260 recipients from the rolls of Aid For Dependent
Children (AFDC). The figure appears to be higher, the more robust
the overall economy; conversely, a slacker economy tends to yield
the lower figure. Assuming (to be conservative) an average AFDC
payment of $200 per month per recipient and a total of 26,000 new
jobs in Connecticut because of Foxwoods, the estimated savings
would range from $9.61 million to $16.20 million per year, based on
an estimated reduction in AFDC recipients of 4,004-6,760 people.
III. House Prices; Again using econometric techniques, we
estimate that (over the long run) every 1 percentage-point
reduction in the unemployment rate in the four easternmost Labor
Market Areas (LMAs) in Connecticut is associated with a 7.7 percent
increase in real housing prices (after inflation) in the four LMAs.
Translating Foxwoods' employment impacts into reductions in LMA
unemployment rates, we conclude that, just from the casino's hiring
alone, real house prices in the 4 LMAs will rise by $1,177 billion
by late 1994. Further, adding indirect employment effects raises
the total increase in house prices to $6.1 billion by the end of
the decade.
372
THE ECONOMIC IMPACTS OF THE FOXWOODS HIGH STAKES BINGO & CASINO
ON NEW LONDON COUNTY AND SURROUNDING AREAS
by
Arthur W. Wright & Associates^
INTRODUCTION
Foxwoods High Stakes Bingo & Casino, located near Ledyard,
Connecticut, has enjoyed round-the-clock operations and financial
success from the day its doors opened in early 1992. The venture
has expanded steadily — the latest additions opened this month,
with more to follow by year's end — and plans for further growth
are underway. A recent New York Times article (September 1, 1993,
p. B1+) characterized Foxwoods as "the region's clear center of
gravity. "
The casino's rapid success has brought growing pains, as a
quiet, rural part of the state struggles to adapt to growing
numbers of visitors and a burst of new economic activity. On the
plus side, though, in an area hard hit by defense cuts, Foxwoods
has already provided more than 6,000 new jobs, and total employment
will exceed 9,500 once current plans are complete. The average
gross pay of casino employees (including reported tips) is $25,000
per year — about $2,100 more than the average job paid in New
London County before February 1992 — and average fringe benefits
add $9,300 a year to total employee compensation.^ The casino's
^ John M. Clapp, Dennis R. Heffley, Subhash C. Ray, Jon
Vilasuso, and Arthur W. Wright. We acknowledge with thanks the
assistance of Peter Shapiro & Associates. Responsibility for any
errors remains with us.
^ Based on full-time equivalent employees, Foxwoods data for
April 1, 1993, show yearly "salary & wages," inclusive of "tips and
tokes" (dealers' tips) reported to management, of $25,043 on
average, excluding paid leaves. Average fringes (including paid
leaves, required social prograjns, group insurance programs,
retirement matching contributions, and employee meals) come to
$9,334. The sum of salary & wages plus fringes is $34,378. To the
extent not all tips are reported, this figure understates total
373
ECONOMIC IMPACTS OF FOXWOODS CASINO
-2-
owner, the Mashantucket Pequot tribe, has been able to improve the
living standards of its members, and to start new, ancillary
businesses. The State of Connecticut has used revenue-sharing from
slot-machine proceeds to increase its aid to the state's 169 cities
and towns • Construction of the various phases of Foxwoods '
development has employed workers from across the state and around
the region.
The economic impacts of the casino do not end with the direct
effects just listed. Like the ripples from a stone thrown into a
pool of water, increased hiring and income are radiating from
Foxwoods ' own activities to other economic sectors and to other
areas (local, state and regional). Indirect spillovers from the
casino's growth include not only brightened prospects for tourism
in the region but also (more fundamentally) additional jobs and
incomes, reduced unemployment, lower spending on public assistance,
and higher real estate values in surrounding areas.
This report focuses on three specific indirect impacts of
Foxwoods: I. employment; II. public assistance (AFDC); and III.
prices of single-feimily housing. While these three topics do not
exhaust the indirect impacts of the casino's operations,^ they are
likely to be the most significant ones.
I. Employment ; Applying recognized tools of economic-impact
analysis, we estimate that every new Foxwoods job supports roughly
1.1 additional non-casino jobs in New London County. The average
job in the county before the casino opened paid nearly $23,000 in
1993 dollars. Further, because county residents spend part of
average employee compensation.
^ For instance, we have not explored the indirect effects of
construction activity, which by nature takes place over a fixed
period of time and then ends. Nor have we expressly studied the
spillover effects from casino purchases of goods and services; to
a considerable extent, however, our analysis of indirect job
creation captures those effects.
374
ECONOMIC IMPACTS OF FOXWOODS CASINO
-3-
their incomes on "imports" from other Connecticut counties, a new
Foxwoods job ultimately generates a further three-quarters of a new
job in the rest of the state, where the average job paid about
$30,500. Lesser but still noticeable employment spillovers occur
in Rhode Island, by similar reasoning.
II. Public Assistance (AFDC); With conventional econometric
techniques we estimate that (by increasing employment in a multi-
county region) an additional 1,000 jobs trims between 154 and 260
recipients (adults and children) from the rolls of Aid For
Dependent Children (AFDC) in that region. The figure appears to be
higher, the more robust the overall economy; conversely, a slacker
economy tends to yield the lower figure. Assuming a conservatively
low average AFDC payment of $200 per month per recipient, the
creation of 1,000 new jobs, directly at Foxwoods or indirectly by
casino expansion, would save an estimated $30,800 to $52,000 per
month, or $369,600 to $624,000 per year in AFDC payments.
III. House Prices; Again using econometric analysis, we
estimate that (over the long run) every 1 percentage-point
reduction in the unemployment rate in the four easternmost Labor
Market Areas (LMAs) in Connecticut* is associated with a better
than 7.7 percent increase in real housing prices (after inflation)
in the four LMAs. Hence, if the employment stimulus (indirect as
well as direct) from Foxwoods hiring reduced the regional
unemployment rate by 4 points, the price of a representative house
worth (say) $100,000 today would ultimately rise by more than
$30,000. This is a gross effect: We do not take into account other
economic forces ( such as Navy submarine procurement and force
levels) that will also affect house prices. But the stout upward
pressure on house prices from casino expansion should be welcome in
* New London-Norwich, Danielson, Willimantic and Lower River.
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ECONOMIC IMPACTS OF FOXWOODS CASINO
-4-
an area that has suffered steephouse-price declines — in New
London-Norwich on the order of 36 percent — since the late 1980s.
I. EMPLOYMENT EFFECTS
A. Indirect Job Creation in New London County
Why would we expect to find additional hiring in the local
economy as a result of the expansion of employment at Foxwoods?
Because the services provided by casino workers consist largely of
"exports" outside the county: Most customers come from other parts
of Connecticut and other states; their expenditures at Foxwoods
represent an inflow of income to New London County. Thus, the
casino jobs support additional local jobs directed to satisfying
the day-to-day consumption needs of casino employees. In contrast,
if Foxwoods customers came mainly from New London County, local
purchasing power would simply be recirculating — and casino growth
would create far fewer additional jobs.
To get at the extent of indirect job creation arising from
casino employment, we used a well-known technique called economic
base analysis.^ This technique focuses on measuring how much of
local economic activity is "basic" — that is, involved in
exporting goods and services outside the locale — and therefore
capable of supporting additional, "non-basic" (or local)
employment. Combining information on the basic/non-basic mix for
all local economic sectors,* we can calculate a multiplier that
^ For the technical methodology and detailed calculations for
our economic base analysis, see the separate document, "Economic
Base Analysis for New London County," by Jon Vilasuso.
* Excluding the military. We assume that the military
employment at the Groton Submarine Base serves the entire United
States and not just the residents of New London County. In other
words, the county's consumption of Groton sub base services is no
greater per capita than that of San Diego residents.
376
ECONOMIC IMPACTS OF FOXWOODS CASINO
-5-
expresses the extent to which additional basic employment will
support additional non-basic employment in the locale.
We estimate that creating one new basic job in New London
County will lead to an additional 1.23 non-basic jobs there. Thus,
the total new employment equals the new basic job plus 1.23 local
jobs, or a total of 2.23 new jobs. If the new basic job was an
average job at Foxwoods, it would generate additional income of
some $25,000 in 1993 dollars (as noted earlier).' If the attendant
1.23 non-basic jobs paid the average for New London County,^ the
extra non-basic earnings would come to $28,173 (also in 1993
dollars). The total gain in county earnings would then be $53,173.
The foregoing analysis needs one adjustment. If some Foxwoods
customers come from New London County, one new casino job would not
equal a full basic job. In fact, company analyses of customers'
license plates and special club members' addresses indicate that
nearly all of Foxwoods' business comes from outside the county. To
be conservative, let us assume that only 90 percent of casino
revenues come from outside New London County. The multiplier would
then decline from 1.23 to 1.107.' The Foxwoods addition to county
earnings would remain the same ($25,500), but the extra non-basic
earnings would decline to $25,355 in 1993 dollars, giving a
somewhat smaller total earnings gain of $50,355.
How does the foregoing analysis translate into a total impact
' We ignore the average fringes of $9,300, which equal an
added 27.1 percent of the salary- & -wages figure.
^ According to data in the 1990 edition of County Business
Patterns, adjusted to 1993 dollars by multiplying by the ratio of
the 1993 to the 1990 Consumer Price Indexes.
' The magnitude of the decline increases with the portion of
revenues coming from within the locale. For the detailed
calculation of the decline, see the Appendix to Vilasuso, op.cit.
377
ECONOMIC IMPACTS OF FOXWOODS CASINO
-6-
of Foxwoods on employment in New London County?^° Still asstiming
that 90 percent of casino activity is basic, if the employment
multiplier holds over the full range of Foxwoods ' hiring from its
inception (February 1992) through the completion of current
expansion plans, 9,500 casino jobs will ultimately generate an
additional 10,517 jobs, or 20,017 in all, in New London County."
If the new non-basic jobs pay the 1993 average figure, the
additional earnings will come to $241 million (in 1993 dollars).
Adding $237.5 million in direct Foxwoods payroll (9,500 times
$25,000) gives a total county payroll increase of $478.5 million.
B. Indirect Employment Effects in the Rest of Connecticut
Why would gains in employment in New London County affect
employment in the rest of the state? Because the county is linked
economically with the other counties in Connecticut. When economic
activity picks up in New London County, its residents resort to
"imports" for a significant proportion of their increased
^° That total impact, and the others discussed in this report,
will occur gradually over time, not immediately. Economic base
analysis provides no insight into the duration or time pattern of
the lags in the estimated impacts. With the later regression
analysis, we are able in one case to obtain some idea of the length
of at least the initial lag following the event of interest —
here, an increase in hiring at Foxwoods.
" The range of validity of our estimated multiplier depends
mainly on how large the casino's total hiring is in relation to
total county employment. In 1993, total employment in the New
London-Norwich LMA — roughly coterminous with New London County
except for several small towns at the edge of the LMA — was about
177,000 excluding Foxwoods' employees. Thus, the 9,500 workers at
Foxwoods represent a 5.4 percent increase over the base excluding
the casino. Note that not all of the indirect job creation from
casino expansion will have occurred by the end of 1993. As noted
in the preceding footnote, the full adjustment of the indirect jobs
will probably extend over a number of years.
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ECONOMIC IMPACTS OF FOXWOODS CASINO
-7-
consumption needs. *^ By extending our previous methodology, we can
translate those imports into the added indirect employment in the
rest of Connecticut that will flow from Foxwoods' expansion,
coupled with its indirect impacts in New London County.
For simplicity, and recognizing that we will be overstating
the effect, let us assvune initially that residents of New London
County obtain all of their imports — the portion of their
consumption needs not produced within the county — from other
parts of Connecticut. The first step is to translate the earlier
total increase in New London County employment from casino hiring
into an increase in basic jobs elsewhere in the state. Basic jobs
will increase in the rest of Connecticut because it will be
"exporting" goods to New London County. The second step is then to
calculate the non-basic/basic multiplier for the rest of the state,
just as we did in section A for the one county. We estimate that
each new job created at Foxwoods translates into 0.74 additional
job in the other counties of Connecticut taken as a whole. At the
average 1990 pay per job in the rest of the state of $30,501
(stated in 1993 dollars), the associated increase in earnings would
come to $22,571. The eventual total of 9,500 casino jobs would
yield 7,030 new jobs, and additional income of some $214.4 million,
throughout the rest of Connecticut.
These estimates overstate the employment and earnings impacts
of Foxwoods' expansion in the rest of Connecticut for a simple
reason: New London County residents in fact do "import" goods and
services from other states, and even other countries. To the
extent they do so, part of the Foxwoods impacts just exaunined will
leak out of Connecticut, thus reducing the figures just reported.
At the same time, we must recognize a countervailing effect that
will offset the reduction. When New London County residents buy
^^ Indeed, New London County is also linked with economies
outside Connecticut as well. Below, we factor the additional links
into the analysis.
379
ECONOMIC IMPACTS OF FOXWOODS CASINO
-8-
goods and services from outside Connecticut, the "foreigners" (in
Rhode Island, France, and so on) enjoy some job creation and income
growth of their own. The foreigners in turn will buy goods and
services from Connecticut — with job-creating and income-enhancing
effects there, too. We have not undertaken the major task of
gauging the net result of the two opposing forces. But we can
state that, even if the net leakage out of Connecticut were as high
as one-half (which we doubt), the success of Foxwoods has had and
will continue to have a major positive impact on jobs and earnings
in Connecticut outside New London County.
C. Direct and Indirect Employment Effects in Adjoining States
Why would Foxwoods' rapid success affect Rhode Island and
Massachusetts? For two reasons: First, not everyone working at
the casino is a New London County or even a Connecticut resident.
Second, some of the indirect effects of Foxwoods' hiring doubtless
spill across the nearby borders with Rhode Island and
Massachusetts.*^ To this point, we have tacitly assumed that all
Foxwoods employees reside in Connecticut. In fact, nearly 20
percent of the casino workforce in mid-1993 had addresses in Rhode
Island or Massachusetts; most of those addresses were in the former
state.** We have not attempted to estimate employment multipliers
and their associated earnings impacts separately for Rhode Island
and Massachusetts. However, given the near-lack of barriers to
movements of people and goods across state lines, it is safe to say
*^ We could include New York as well. However, the distance
(100+ miles) between Foxwoods and the western boundary of
Connecticut is a barrier to the direct hiring of New Yorkers and
probeibly greatly weakens the indirect spillovers as well.
" An analysis of employee address zip codes for mid-1993
(4,476 total employees) shows 64.4 percent in the New London-
Norwich LMA, and another 15.6 percent in other parts of
Connecticut, giving a state total of 80.0 percent. Further, 17.8
percent of the addresses are in Rhode Island, just under 1 percent
in Massachusetts, and 0.2 percent in New York.
380
ECONOMIC IMPACTS OF FOXWOODS CASINO
-9-
that the results reported above for Connecticut apply qualitatively
to Rhode Island and (to a much lesser extent) Massachusetts. At
the same time, it is true that the force of our estimated impacts
on Connecticut is less than stated earlier, to the extent that
other states benefit from the increased economic activity at
Foxwoods .
II. PUBLIC ASSISTANCE (AFDC)
Why would the rapid growth of Foxwoods affect public assist-
ance programs? Because (as we have seen) casino employment creates
additional jobs in both nearby towns and throughout the surrounding
region. Economic theory suggests that new employment opportunities
will attract some people currently on welfare and thus lower the
numbers of people on public assistance. Hence, we would expect the
addition of 9,500 jobs at Foxwoods to reduce the number of welfare
recipients and the attendant fiscal burden on government.
To test this proposition, we applied least-squares regression
techniques to data on the numbers of recipients of Aid For
Dependent Children (AFDC) and on total employment, adding (for
control purposes) other explanatory factors such as population and
the size of the average welfare payment per client.^* Clients
include both adults and children; thus one household would
typically have at least two recipients. We used statewide data for
all 50 states;^* however, the results are robust, and we have not
'* For the technical methodology and detailed calculations of
our regression analysis of the relation between welfare and
employment, see the separate document, "Determinants of Welfare
Dependence: A Study of Caseloads," by Subhash C. Ray.
'® A regression on time series data for the whole United
States, 1960-1987, yielded a similar estimate of the relationship
between employment and welfare rolls. We attempted to obtain data
by town for Connecticut from the State Department of Income
381
ECONOMIC IMPACTS OF FOXWOODS CASINO
-10-
f ound any reason to think that Connecticut is fundamentally
different from the national average, once one controls for
population and payment levels.
Estimates based on state data for 1987, 1988 and 1989 indicate
a statistically significant negative relationship between
employment and the number of welfare recipients. For 1987, the
estimated coefficient suggests that 1,000 new jobs would reduce
state AFDC rolls by an average of 260 people. The results for 1988
and 1989, as individual years, show comparable but statistically
weaker and smaller relationships; however, combining data for the
two years yields a strongly significant, and smaller, relationship:
1,000 new jobs would cut AFDC rolls by 154 recipients. What may
explain these results is that 1987 was still a boom year for the
national economy, whereas 1988 and 1989 saw the onset of recession.
The smaller employment coefficient for 1988-89 suggests that new
jobs have less of an impact on welfare recipient numbers when a
recession is simultaneously adding new people to the rolls .
Taken at full strength, these robust estimates imply that the
start-up and success of Foxwoods have in all likelihood reduced
noticeably both welfare rolls and total payments in Connecticut,
and probably in Rhode Island, too (see section II. C. above).
Assuming the average effect holds for all new employment created
because of the casino's existence — say, 26,000 jobs^' — the total
eventual associated decline in AFDC recipients ranges from 4,004 to
6,760 — probably closer to the former than the latter, unless the
weak performance of the southern New England economy in the early
1990s improves soon. Assuming an average monthly benefit payment
Maintenance, but to no avail in time for use in the present
analysis.
" I.e., 9,500 directly at Foxwoods, the further 10,500 or so
jobs in New London County, and an added 6,000 (conservatively
calculated at about 85 percent of the maximum figure) for
associated job growth in the rest of the state.
84-760 0-94-13
382
ECONOMIC IMPACTS OF FOXWOODS CASINO
-11-
per recipient of $200 (probably low), the monthly savings would
range from $800,800 to $1.35 million; the yearly savings would run
from $9.61 to $16.20 million.
We cannot be sure about the distribution of these effects
among the towns and cities in the region. Because (as noted above)
a large part of the direct hiring at Foxwoods has occurred in the
New London-Norwich LMA, much of the reduction in AFDC rolls and
payments has likely occurred there. But we have found noticeable
indirect hiring effects in the rest of Connecticut and (by
inference) Rhode Island. Also, we cannot tell how many casino
employees with local addresses have moved there to work. We are
confident, though, that the 9,500 new Foxwoods jobs will ultimately
lessen substantially the welfare burden in both Connecticut and
Rhode Island.
III. HOUSE PRICES
Why would we expect to find a relationship between the success
of Foxwoods and house prices in the surrounding area? Because it
is a well known economic result that real estate prices generally,
and single-family housing prices in particuleu:, move in the same
direction as economic activity. During recessions, when
unemployment rises and income growth slows, the demand for houses
declines; given the supply, prices fall. Conversely, with the
lower unen^loyment and rising incomes of a robust economy, the
demand for houses, and (with it) their prices, rise. One of the
members of the research team responsible for this report has
contributed to the economics literature on this subject.^* We
*® John M. Clapp auid Carmelo Giaccotto, "The Influence of
Economic Variables on Local House Price Dynaunics," June 1993,
forthcoming in Journal of Urban Economiria. The regression analysis
in this study used data for Hartford, Connecticut.
383
ECONOMIC IMPACTS OF FOXWOODS CASINO
-12-
replicated his analysis to exaimine the impact of casino hiring on
house prices in the region that surrounds it.^®
With least squares regression techniques and quarterly data,
we estimated the statistical relation between unemployment rates
and real house prices (after inflation) in the four easternmost
LMAs in Connecticut. The data spanned the period 1981: IV (house
sales prices) or 1982:1 (unemployment rates) through 1993:1. In
keeping with previous studies, our hypothesis was that regional
rather than strictly local unemployment rates would affect house
prices in a given locale. Moreover, we expected moves in house
prices to lag changes in the unemployment rate by some months.
The results bear out the hypotheses: On average, every 1
percentage point decline in the weighted-average regional (4-LMA)
unemployment rate is associated, 9 months later, with a 7.7 percent
increase in real house prices. The results also show that the
impact on house prices is greater, the smaller the initial
unemployment rate from which the 1-point decline occurs, and vice
versa:
Initial Unemoloy-
Increase in Real House
ment Rate
Prices Per 1-Point Decline
4 %
10.9 %
5 %
8.6 %
6 %
6.3 %
7 %
4.0 %
^' For the technical methodology and detailed calculations of
our regression analysis of the relation between house prices and
changes in the unemployment rate, see the separate document, "The
Impact of a Change in Basic Employment within One LMA on House
Values in the Same and Surrounding LMA's," by John M. Clapp. See
footnote 4 above for a listing of the four LMA's. The New London-
Norwich LMA includes two Rhode Island towns, Hopkinton and
Westerly, which we exclude. Note that we had to switch from New
London County (in analyzing employment impacts) to the four LMAs
(in gauging effects on house prices) because of the way the
relevant data are reported. LMA data for New London-Norwich were
too scant in sectoral detail to use them in the employment-impact
work; thus we turned to county- level data.
384
ECONOMIC IMPACTS OF FOXWOODS CASINO
-13-
In other words, the stronger the economy, the greater the boost in
house prices associated with a 1-point reduction in the regional
unemployment rate.
To translate these results into effects on house prices in the
region surrounding Foxwoods, we must first convert the employment
effects discussed in section I above into changes in unemployment
rates. The latter equals the number unemployed (not working and
actively seeking work), divided by the labor force, which equals
the number employed plus the number unemployed. Doubtless, some
casino hiring has directly reduced the ranks of the unemployed,
hence also nearby-LMA unemployment rates (as the labor force would
not have changed). Other Foxwoods hires, however, likely are new
entrants into the labor force in the 4 LMAs; the probability of
this is greater, the larger is total employment at the casino.
Moreover, many Foxwoods workers hired locally create job non-casino
vacancies that attract job-seekers to the area. Lacking evidence
on the local /in-migrant split, we assumed that 75 percent of the
first tranche of 2,300 hires (early 1992) came from those
unemployed and living in the 4 LMAs, while 25 percent were new
labor-force entrants. For the second tranche of 1,900 workers
(January 1993), we assumed a split of 65-35, and for the third
tranche of 3,600 employees (the balcuice of 1993), 30-70. ^^
Note that, while new labor force entrants are not included
directly in our analysis, their presence in the 4 LMAs will give a
further stimulus to real house prices. Hence, our calculations
based just on employment gains from existing labor force give
conservatively low estimates for increases in house prices.
Coupling these labor force assumptions with the regression
results, and further recalling that the full indirect employment
2° We limited the total additional employment to 7,800 workers
in order to keep the scenarios within the present century. The
full effects of casino employees added after 1994 will extend
beyond the year 2000.
385
ECONOMIC IMPACTS OF FOXWOODS CASINO
-14-
gains discussed in section I will occur gradually over a number of
years, enables us to construct a scenario for the impact of
Foxwoods ' expansion on real house prices in the four LMAs over the
course of the 1990s. We discuss first the direct effects from
casino hiring only, and then the longer-term indirect effects of
the additional hiring induced by Foxwoods' growth.
Within 9 months of the first 2,300 casino hires (starting
January 1992), real house prices rose by an estimated 2.6 percent,
or some $439 million. ^^ The second tranche of 1,900 employees
(starting February 1993) will have added another 1.9 percent, or
$313 million, to real house prices, for a total increase of $752
million by the end of 1993. Finally, by late 1994, assuming a
third group of 3,600 new employees added during 1993, there should
be a further boost in real house prices of 2.5 percent, or $425
million, for a total of $1,177 billion just from Foxwoods' own
hiring.
Under the stated assumptions about labor force entry in the 4
LMAs, the indirect as well as the direct employment effects of the
casino's growth will steadily reduce unemployment in the region.
As that happens, there will be further upward pressures on real
house prices. Assuming total Foxwoods employment were to remain at
7,800, by the end of the decade the estimated additional boost in
house prices would total 29.1 percent, or $4,882 billion.
Combining the indirect with the earlier direct effects, the
estimated increase in real house prices would come to 36.1 percent,
or $6,059. If casino hiring reached the full projected 9,500
employees by early 1994, it would add another 8 percent, or $1,341
billion, to the totals.
^' This is gross upward pressure on house prices in the region
from Foxwoods hiring, not a prediction of actual house-price
changes. The regression results explain only some two-thirds of
the variation in real house prices. Other variables, assumed
constant in this discussion, could well have pushed house prices
downward .
386
ECONOMIC IMPACTS OF FOXWOODS CASINO
-15-
To put the foregoing figures in perspective, an 18.4 percent
increase in the real price of a representative house worth $100,000
today would be $18,400. Remember that real prices are net of price
inflation.
IV. SUMMARY AND CONCLUSIONS
We have examined the economic impacts of the rapid expansion
of Foxwoods High-Stakes Bingo & Casino since early 1992, on three
dimensions: I. employment; II. AFDC payments; and III. house
prices. Our estimates provide strong evidence that those impacts,
on the state as well as on the immediate locale around the casino,
have been and will continue to be significant.
I. Employment Impacts; Every new Foxwoods job will support an
estimated 1.107 additional local jobs in New London County. The
resulting total gain in local payroll (casino plus non-casino)
equals $50,355 per Foxwood job. For the full complement of 9,500
casino employees, total additional local employment will eventually
come to 20,017. The increase in payroll for Foxwoods and non-
Foxwoods workers combined will total $478.5 million.
The employment and earnings gains in New London County will
spur comparable, though smaller, gains in the rest of Connecticut,
and in other states as well. The planned total of 9,500 Foxwoods
workers will support up to 7,030 new jobs in the other Connecticut
counties, with added payroll (at the 1990 average per job) of
$214.4 million. "Leakages" to Rhode Island and other states will
reduce those figures somewhat, but the gains in the other states
(especially Rhode Island) will in turn offset the leakages as their
residents buy goods and services in Connecticut.
387
ECONOMIC IMPACTS OF FOXWOODS CASINO
-16-
II. AFDC Payments; Every new job created reduces the AFDC
rolls by an estimated 0.154 to 0.260 person. If those estimates
hold for the total employment impact of Foxwoods, statewide, and
assuming an estimated total impact of 26,000 jobs, total AFDC
recipients will decline by 4,004-6,760 people, and total budgetary
savings will run $9.61-16.20 million per year.
III. House Prices; Each decline of 1 percentage point in the
unemployment rate in the 4 easternmost LMAs in Connecticut is
associated with a 7.7 percent increase in real house prices, on
average. Translating the employment impacts of Foxwoods into
reductions in LMA unemployment rates, under plausible labor force
assumptions, and taking into account the short- and longer-term
adjustment lags, we estimate that the existence of the casino will
have increased real house prices in the 4 LMAs by some $1,177
billion by the end of 1994, just from casino hiring alone.
Incorporating the indirect employment effects, assumed to occur
gradually over the rest of the decade, the total increase in real
house prices will amount to fully $6,059 billion.
388
THE IMPACT OF A CHANGE IN BASIC EMPLOYMENT WITHIN ONE
LMA ON HOUSE VALUES IN THE SAME AND SURROUNDING LMA'S
by John M. Clapp
September 24, 1993
What is the impact of a change in basic employment in one local area on house values
in the same and surrounding areas? Suppose that we start with the New London-Norwich labor
market area (LMA), and that basic employment is added to that area. This causes a larger
change in total employment because basic employees spend money on local goods and services.
If unemployment is above normal, as it was in 1992-93, then the additional total employment
should come largely from a reduction in unemployment. Alternately, discouraged workers
should come back into the labor force; this has a similar effect in terms of increasing the
employment of the local population.
According to the research of Clapp and Giaccotto (forthcoming. Journal of Urban
Economics, 1993) a reduction in unemployment will cause an increase in real house prices.'
For each 1% decrease in unemployment, the increase in house prices should range from 2% to
about 8%, with higher increases in communities with greater housing wealth and lower increases
in communities with more modest housing. The Clapp and Giaccotto research shows that it is
possible to measure point elasticities: that is, a 1% change in unemployment is associated with,
for example, a 3% change in the value of a typical house in the opposite direction. Once this
elasticity has been determined, it can be used to find the aggregate change in house values in the
local area.
'Unemployment is reduced by the change in lolal nnploymrat. not just the change in basic employment. CUpp and
Giaccouo found that any change in unemployment, even one from the hiring of nonbasic employees, caused a change in real
house prices.
389
BASIC EMPLOYMENT AND HOUSE VALUES 2
It is plausible that the Clapp and Giaccotto approach can be extended to find changes in
house values in surrounding LMA's. This would require running regressions with percent
change in real price as a dependant variable and percentage unemployment in neighboring
LMA's as explanatory variables. Lagged values of unemployment might be included in this
regression. Again, the elasticities found for neighboring areas could be used to find the
aggregate change in house values resulting from an increase in basic employment.
Details of the Methodology for Finding Aggregate Value Changes
Aggregate assessed value for single family residential property within the LMA can be
used to find the effect of a change in unemployment on aggregate house values and on aggregate
tax revenues. In order to do this, it is necessary to have the aggregate assessed value as of a
given point in time (e.g., October 1, 1992) within the LMA. We would then use the
transactions data from 0PM to fmd the average ratio of sales price to assessed value around this
same time period. This average ratio would then be used to fmd total property value within the
LMA. The elasticity calculated above together with the expected change in unemployment
would be used to calculate the effect of the change of unemployment on aggregate single family
residential property values. Note that this methodology underestimates the effect of the change
in unemployment because the effect on multi-family properties and commercial properties has
not been included.
The data needed to implement this can be summarized as follows:
1 . Expected (or historical) change in basic employment;
2. The economic base multiplier;
390
BASIC EMPLOYMENT AND HOUSE VALUES 3
3. The labor force and unemployment in the LMA;
4. Indices of house prices in each LMA;
5. The elasticity of house prices with unemployment, estimated by regression
analysis;
6. Aggregate assessed value for SFR property within the LMA;
7. The ratio of SFR sales prices to assessed value.
Items 3-6 would be needed for neighboring LMA's if estimates of spillover effects were
required.
p^timating the Elasticity of Change in House Prices with Respect to Change in Unemplovment
Regression analysis was used to estimate the percent change in real house prices with
respect to a 1% change in the unemployment rate. An attempt was made to estimate two
elasticities of this type: one with respect to a 1 % change in unemployment in the same LMA and
second with respect to a 1 % change in unemployment in a neighboring LMA.
To begin this process, we collected data on quarterly unemployment rates by town from
the beginning of 1982 through the first quarter of 1993. This was done for each town within
four LMAs (see M^ 1):
Danielson
Lower River
New London/Norwich
Willimantic
The unemployment data are graphed as Figure 1 and Figure 2.
The graph tells us that the unemployment rates in the four LMA's generally moved
391
BASIC EMPLOYMENT AND HOUSE VALUES 4
together, even though the levels are somewhat different. Thus, the whole region was clearly
influenced by very similar economic conditions over this time period. This suggests that it will
be difficult or impossible to disentangle the effects of unemployment change in neighboring areas
from unemployment change in the same area as the real price change.
Indices of the value of a typical house in each LMA have been developed by the author
(see Figure 3). These numbers measure the value of a typical, unchanged house in each area.
The dollar values are an estimate of the most likely sales price obtained from repeatedly selling
this unchanged house each quarter from the fourth quarter of 1981 through the first
quarter of 1993.
Since the population and income characteristics of each area differ, the typical house
differs. For example, the typical house in the Lower River area is a better quality, on a better
location, than the typical house in each of the other three area (Figure 3). New
London/Norwich has a typical house in the middle of the value range whereas Danielson is at
the low end.
The movements of house prices are somewhat diffesent in the four LMAs. Lower River
has had essentially constant house prices since the end of 1987 whereas the other areas
experienced some decline, at least through the fourth quarter of 1992. The New
London/Norwich LMA has been more negatively impacted over the last two years, probably by
a decline in defense-related employment.
The constant quality price indices are deflated by the Consumer Price Index (CPI) in
order to find real house prices. We do this because we expect unemployment to have an
influence on real house prices, not on the rate of inflation.
392
BASIC EMPLOYMENT AND HOUSE VALUES 5
Finally, we take percentage change in real house prices. The percentage change
transformation is used because we are trying to find an elasticity between house price change
and change in unemployment.
The four LMAs considered here define a region with the New London/Norwich LMA
as its core. This research focuses on the change in basic employment within the New
London/Norwich LMA. Since this is the core, we define the three other LMAs as the peripheral
regions. We are interested in the impact of the change in unemployment within New
London/Norwich on each of the three neighboring areas (see the arrows on Mi^) 2). Therefore,
New London/Norwich is defined as the appropriate neighboring area for each of the other three.
For New London/Norwich itself, the appropriate concept of neighboring area is
an average of the other three areas. That is, we would like to know the impact of a change in
unemployment within the entire peripheral region on the core area (New London/Norwich).
When we average unemployment in these three areas, we weight the unemployment in each area
by the total labor force within the area. This gives lower weight to the Lower River area and
higher weight to Willimantic and Danielson.
In order to implement the model efficiently, we stack the data. That is, we take the
quarterly data for Danielson and put it at the top of the stack; under those data we put all of the
quarterly data for Lower River and so for the four LMAs.
Results of the Repression Analysis
When unemployment in the same LMA ("own unemployment") is the only explanatory
variable, then the estimated elasticity is between -3 and -4 (Table 1. regressions 1 and 2). This
means that an increase in unemployment of 1 % will cause a decrease in real house prices of
393
BASIC EMPLOYMENT AND HOUSE VALUES 6
between 3 and 4%. The higher elasticity (-4) is associated with a 3 quarter (9 month) lag on
unemployment, and this lag increases the R^ significantly. A three quarter lag is plausible
because it takes time for an increase in unemployment to have an effect on purchases of houses.
Since a number of tests revealed that the three quarter lag is best, we retain that for the rest of
this research.
When neighboring unemployment is added to own unemployment in regressions 3-S of
Table 1, the neighboring unemployment has an elasticity of between -6.9 and -7.4. Also, the
addition of neighboring unemployment nearly doubles the R' to the vicinity of .65.
The most surprising result is that the own unemployment elasticity is small and not
statistically significant when the neighboring unemployment is included in the regression! The
most likely explanation of this is the similarity of movement among all of the unemployment
variables (Figure 1). Since neighboring unemployment is typically for much larger geographical
areas (See Map 2 and discussion in text) it dominates own unemployment.
Since New London/Norwich is the center of the region, we hypothesize that this elasticity
might be different than those for the three peripheral LMAs. Regressions 4 and 5 test this
possibility with negative results.
The Impact of Unemployment in the Entire Region
The five regressions presented so far (Table 1) are unable to distinguish between the
impact of unemployment in the own LMA and unemployment in neighboring LMAs. Therefore,
we did the analysis with unemployment in the entire metropolitan area as an explanatory
394
BASIC EMPLOYMENT AND HOUSE VALUES 7
variable.' The result, regression 6 in Table 1, indicates an elasticity of -7,7,
It is possible that unemployment has a nonlinear effect on percent change in house prices.
It is reasonable to expect that a reduction in unemployment has less effect at high levels of
unemployment than it does at low levels of unemployment. This is because some reduction in
unemployment when the economy is very slack will have little effect on the demand for housing.
But, when unemployment is low, demand for housing is pushing against a limited supply and
prices will rise rapidly, after a 9 month lag.
We tested this idea by including unemployment squared in regression # 7 in Table I.
The positive sign on squared unemployment conforms to our expectation that the effect of
unemployment on house price change is greater when the unemployment rates are low.
Regression # 7 predicts the following elasticities of house prices with respect to unemployment:
Unemployment
Rate
Elasticity
.03
-13.2
.04
-10.9
.05
-8.6
.06
-6.3
.07
-4.0
These elasticities are the ones used to estimate the effect of the change in basic
employment on house prices in the four labor market areas considered here. By measuring total
'Because of the way that Ihe daU were collected for the study this variable is the weighted average of the four unemployment
rates in each quarter The weighting factor is the labor force in each area ui 1990. This unemployment series ii an
approximation to the rate of unemployment that would be aiuined if unemployed persons were added up for the four LMAi and
divided by the sum of the labor force in the four LMA's.
395
BASIC EMPLOYMENT AND HOUSE VALUES 8
house value in the four areas, we can estimate the aggregate dollar change in house value due
to any change in basic employment.
Our conclusion from this research is that the average elasticity of real house price change
with respect to unemployment in the region is -7.7 over the time period firom 1982-1993.'
This elasticity is higher when unemployment is low (e.g., 3%) than when it is high (e.g., 7%).
The elasticity of real house price change with respect to unemployment in one's own area is
approximately zero.
The Impact of Unemployment on Aggregate House Values in the Entire Region
Our main finding from the previous section is that a change in unemployment in the
region defmed by the four LMAs has a roughly the same effect on each of the LMAs within the
region. This effect is measured by the elasticities based on regression 7, Table 1 (see discussion
above). Since the effect is the same for all LMAs in the region, it is a simple matter to measure
the impact of a reduction in unemployment in the broad region on house values in the region.
To implement this idea, we calculated the following:
1. Aggregate residential property values in the entire region as of April 1, 1991.
This information came from the Equalized Net Grand List (ENGL) computed by
the Office of Policy and Management.
2. The change in unemployment caused by a change in basic employment. This is
the basic employment change multiplied by the economic base multiplier and
divided by the labor force in the region as of the second quarter, 1992.
^is conclusion is undoubtedly specialized for the region being considered here The dominant position of the New
London/Norwich LMA gives a very special inlcri-irctalion to the concept of neighboring unemployment.
396
BASIC EMPLOYMENT AND HOUSE VALUES 9
3. Multiply the result from Step 2 by the elasticities calculated in the previous
section/ This gives the percentage change in house values expected because of
the new basic employment.
4. Multiply the percentages in step 3 by the aggregate house value in step 1 to obtain
the aggregate change in house value in the region because of the change in basic
employment.
When these steps were implemented with the data for the four LMAs, we found a change in
aggregate value of $1.8 B (+10.8% for the typical house) over a 5 year period, from the
February 1992 hiring of 2,300 employees. The January, 1993 hiring of an additional 1,900
employees produces an additional $4. 1 B change in house values (+6.8% for the typical house).
Finally, the hiring of an addition 5,200 employees by January, 1994 is estimated to produce an
additional $4.4 B in house value (+26.4% for the typical house) within 5 years (by 1999).
The grand total from hiring 9,400 employees is expected to be an increase of $7.4 B in
house value (47.5% increase in the typical house). This scenario, which assumes no other
changes in the economy (e.g., no major changes at electric boat), should be fully realized by
1999.
*Since ihe elasticity varies with the unemployment rale, steps 2 and 3 are done for each 1 % change in unemployment caused
by the basic employment change
397
BASIC EMPLOYMENT AND HOUSE VALUES 10
m. HOUSE PRICES
A relationship between percent change in house prices and the rate of unemployment
(unemployed persons divided by the labor force) was used to determine the effects of an increase
in basic employment on house prices. It is reasonable to expect that economic recessions will
cause unemployment to rise and to remain at a high levd; this reduces the demand for housing
and causes house prices to decrease. Conversely, a robust economy Miill cause the
unemployment rate to decline to low levels, exerting upward pressure on house prices.
Therefore, we use regression analysis to find the percent change in house prices for every 1 %
in the unemployment rate. This approach has been tested in the academic literature.
Seventy-five percent of the direct plus indirect employment effects are assumed to come
from the unemployed in the four labor market areas combined.* Twenty-five percent of the
new employment is assumed to come from new entrants into the labor force: for example,
discouraged workers or those hired from outside the four LMA's. We then divide the change
in unemployment by the labor force to find the effect of new employment on unemployment in
the area.
In the current version of the model, twenty-five percent of the employees that come from
new entrants into the labor market have no impact on house prices. In reality, they undoubtedly
would bid for housing and cause house prices to increase. Thus, our model produces a
conservative (low) estimate of the impact of new employment on house prices.
Our regressions show that it takes at least 9 months for a change in the unemployment
'The hypothesis is (hat the impact of unemployment on house prices in (he New London-Norwich LMA will depend on
regional unemployment, not just local This hypothesis holds up well in the four adjoining LMAs.
398
BASIC EMPLOYMENT AND HOUSE VALUES 11
rate to have an impact on house price changes. In addition, it takes time for a change in basic
employment to cause changes in nonbasic employment. This time lag can be substantial because
restaurants, retailers and other nonbasic employers respond slowly to new business opportunities
in the area. Therefore, we estimate that it takes one to five years for the effects of new basic
employment on house prices to be fiilly realized.
Our estimates of the impact on house prices are quite large.
399
400
Map 2
RELATIONSHIP AMONG THE
FOUR LABOR MARKET AREAS
OF EASTERN CONNECTICUT
The New London/Norwich LMA is the
core employment market influencing
each of the surrounding LMA's (radial
arrows). New London/Norwich is
influenced in turn by the ring of
three surrounding LMA's (dashed ring
and arrows). The influence of the
ring LMA's is measured by the weighted
(by resident labor force) average
unemployment rate in the three LMA's.
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406
Economic Base Analysis for New London County
Jon Vilasuso
September 6, 1993
Sunnary
This study exeunines the employment and income effects of creating
one additional job at Foxwoods High Stakes Bingo & Casino.
Specifically, we address the following set of questions.
1. Bow many additional jobs, not including the one job at Foxwoods
High Stakes Bingo & Casino, will be created in New London County?
2. What additional annual income is realized in New London County
as a result?
3. Will the rest of Connecticut (not including New London County)
also experience job growth as a result of generating an additional
job at Foxwoods High Stakes Bingo & Casino?
4. What additional annual income is realized in the rest of
Connecticut if job growth is present?
Each question is addressed in turn.
1 . Employment Effects in New London County Using employment data
from the 1990 County Business Patterns and the 1987 Census of
Governments, we find that the creation of one job at Foxwoods High
Stakes Bingo & Casino supports an additional 1.23 jobs in New
London County. For each new job created at the casino. New London
County realizes a total increase in employment of 2.23 jobs
inclusive.'
' This assumes that the additional job created at the casino
serves customers outside New London County. In this case, this
assumption appears reasonable because this new job is placed
under 70 SIC, which for New London County, is primarily directed
at nonlocal consumption needs.
407
2. Income Effects in New London County Osing payroll data from the
County Business Patterns and the 1987 Census of Governments, we
find that the additional 1.23 jobs in New London County generates
an annual income of $25,482 in 1990 dollars. In other words, the
addition of one position at Foxwoods creates additional income of
$25,482 per year in 1990 dollars for New London County beyond the
annual income of the casino employee.^
3. Employment Effects in Connecticut Excluding New London County As
a result of adding one additional eo^loyee to Foxwoods, the state
of Connecticut, excluding New London County, realizes a gain in
employment of 0.74 new jobs.
4. Income Effects in Connecticut Excluding New London County The
0.74 new jobs in Connecticut, excluding New London County,
generates annual income of $20,415 measured in 1990 dollars. This
figure does not include income changes in New London County.
Methodology
In this part, the methodology employed is described. Each question
in examined in turn.
1. Employment Effects in New London County Economic base analysis
is used to address the question: what are the total employment
effects of creating an additional job in New London County? To
determine the total employment effects, we must first distinguish
between employment that serves the consumption needs of the local
economy — nonbasic employment — and employment that produces goods
and services for nonlocal use — basic employment. If a basic job is
newly created, then the total employment effects exceeds the one
^ This works out to an annual income of $20,717 per worker
in 1990 dollars for New London county. This is above average when
compared to the average income of all U.S. workers; the Economic
Indicators reports an average annual (52 weeks) gross income of
$17,958 in 1990 dollars for all U.S. workers.
408
job because this new basic job supports additional jobs in the
local economy's nonbasic sector. The total employment effect is
then the sum of the one basic job and the additional nonbasic jobs
that are created as a result.
Total employment effects of expanding operations at Foxvoods
High Stakes Bingo & Casino are determined by an average
requirements approach. Under the average requirements approach, the
average of employment per capita in each industry is used to
determine the number of jobs that are needed to service local
consumption. Basic and nonbasic employment